Illustration by Paul Blow
Millions of barrels of oil and trillions of cubic feet of natural gas lay undeveloped in Canada’s Mackenzie Valley, a fact that Bob McLeod never hesitates to raise when on the hunt for foreign investors.
But the premier of the Northwest Territories, speaking last year on a trade mission to Beijing, spoke just as enthusiastically about the vast potential to develop renewable energy resources along the same Mackenzie River system.
“The Mackenzie has some of the best undeveloped hydroelectric resources in North America … clean energy that would supply a hungry market to the south of us,” McLeod told Chinese investors. “It would be a long-term investment with significant upfront capital costs,” he added, but “50 to 100 or more years of low operating and maintenance costs will provide an excellent return on investment.”
That McLeod chose to highlight the opportunity to develop and export vast amounts of both renewable and non-renewable resources is no surprise. More puzzling is that in the larger Canadian context, development of renewables such as hydro and wind power has been largely left out of the energy-export dialogue, along with the associated job creation and energy security benefits it would bring.
The federal government talks broadly about Canada being a clean energy superpower, but when it gets down to specifics it is fixated with building pipelines. The job of those pipelines is, for the most part, to move diluted bitumen from Alberta’s oil sands to energy-hungry markets near and far.
“Our current obsession with pipelines is distracting us,” says Danny Harvey, a climate scientist and geography professor at the University of Toronto. “Canada and Alberta need to begin now to prepare for the post-carbon world – a world that will be largely powered by some combination of hydro, wind, solar and biomass energy, all of which are or could be produced in abundance in Canada.”
But can pipeline assets, both existing and planned, be leveraged to accelerate the transition to a low-carbon economy? We know that some pipeline owners, such as TransCanada, also have substantial ownership of transmission assets. Internally, do the two sides talk to each other? In an effort to access stranded renewable sources, it may be easier and less costly to build high-capacity, high-voltage transmission lines if they could piggyback, where appropriate, the same right-of-ways already used by pipelines.
It’s a question and scenario Corporate Knights posed to several experts from the pipeline and power sectors during and after an Enbridge-sponsored roundtable discussion held in Calgary, Alberta, on September 18. Beyond answers like “maybe” and “it depends,” we were mostly left with new questions.
Is there a strong enough environmental and economic argument for such an approach? Would the public support it? Who would finance it? Is it the only approach that should be considered? Should the discussion be about exporting green energy generally rather than green electrons specifically?
Some things are clear. There has been little serious research investigating the medium- and long-term economic potential of exporting Canada’s renewable energy resources. If such research exists, it is not recent nor in the public domain.
We also know that more than 800,000 kilometres of major pipeline right-of-ways crisscross the continent, often reaching into areas where no major electricity transmission infrastructure exists. More projects are in the planning stages, such as TransCanada’s contentious 2,000-kilometre Keystone XL pipeline, which would pass through or near five U.S. states with grid emissions that exceed the U.S. state average. Two of them, Wyoming and North Dakota, have the dirtiest electricity in the country.
Finally, if we are serious about preventing the worst impacts of climate change, the day will come when we’ll need to dramatically reduce the amount of fossil fuels mined, pumped and burned. The International Energy Agency estimates that two-thirds of current proven fossil fuel reserves must stay buried to keep the global climate from warming more than 2 degrees C. And it’s not just about greenhouse gases. In October, the World Health Organization officially declared air pollution a “leading environmental cause of cancer deaths.”
Ultimately, less petroleum is going to have to flow through fewer pipelines, though it’s a reality the industry at this point appears unwilling to acknowledge. “The current strategies laid out in (corporate) annual reports talk of growth that is incompatible with emissions limits,” according to a recent report from the Association of Chartered Certified Accountants.
With existing and planned pipeline infrastructure investments at risk, the challenge is to find ways to future-proof their value.
Power pipe dream
For the past several years power industry consultant Paul Grant has had his eye on the Mackenzie Gas Project, a proposed 1,200-kilometre pipeline that would connect gas fields in the northern parts of the Northwest Territories to markets in Alberta and the United States. The ambitious project, anticipated to cost at least $16 billion, was shelved in early 2012 because of the collapse in natural gas prices, though proponents, such as Premier McLeod, still hope that a change in market conditions will revive interest.
One option, reportedly being considered by project partner Imperial Oil, which is majority owned by ExxonMobil, is to make the pipeline part of a liquefied natural gas (LNG) project that could open up exports to Asia. Grant, a former researcher for IBM and later a scientist at the Electric Power Research Institute (EPRI), envisions that pipeline being built alongside a high-voltage direct-current (HVDC) transmission line that would carry clean electricity south.
“Both the political and economic leverage would be, ‘Hey, we’re going to build this pipeline anyway, we have all the right-of-ways negotiated with indigenous peoples, and all of the government hurdles are out of the way,’ ” explains Grant. “I’ve been trying to convince them to do a paper study on that concept.”
The Mackenzie River alone has more than 10,000 megawatts of undeveloped potential. Less than half of 1 per cent of that has been developed. The southwest corner of the Northwest Territories also has geothermal resources capable of producing thousands of megawatts of electricity. Wind resources are also substantial, though best used to help remote communities reduce their dependence on diesel generators.
Grant has a bolder idea. Why not build the most efficient natural gas power plants available right where the gas is produced, then use a portion of that gas to generate low-carbon electricity that can be exported to Alberta and on to U.S. markets? With all that power generation in one location, it would be easier to capture the carbon, and store (or recycle) the carbon emissions, he adds.
It’s the very definition of blue-sky thinking, and while Grant admits he has struggled to find an audience for the idea, he says the technology is available – though not commercially proven – to make it economical. The key, he says, is to use an emerging class of superconducting cable that, when kept properly refrigerated, transmits direct current super efficiently at high voltages. It’s an approach being tested in China, Japan and Germany.
“It’s happening all over the world, except for North America,” says Steve Eckroad, who as a program manager at the utility-funded EPRI has spent years studying superconductivity in power delivery applications.
One of the only companies making superconducting cables is Devens, Massachusetts-based American Superconductor. Managing director Jack McCall, who is in charge of business development at the company, says the cables are capable of carrying up to 150 times more electricity than conventional transmission wires made out of copper and aluminum. And because they’re made out of superconducting material, there is no “line loss” of electricity caused by resistance to power flow. That’s a big problem with today’s transmission technology, which over long distances can see up to a third of electricity lost as heat as it moves from point A to B.
The large carrying capacity and extreme efficiency of superconducting cabling means its relatively higher cost per kilometre becomes more competitive as distance grows. Research by EPRI and American Superconductor has shown that for underground lines of 1,000 kilometres or longer the economics begin to make sense, at least when compared to doing the same with traditional alternating current (AC) overhead transmission lines.
McCall says one major benefit of superconducting transmission lines is that the right-of-way required for them is only 25 feet wide, versus at least 250 feet for overhead transmission. That means it could easily piggyback narrower pipeline right-of-ways, which brings added savings when one considers that most delays and early project costs are related to obtaining easements.
“If you’ve already gone through that trouble of getting a right-of-way or have an existing one, you avoid that cost,” says McCall, adding that the cables emit no heat or electromagnetic fields so could be co-located close to active pipelines. Technically, the superconducting cables could even run through inactive or abandoned pipelines.
It’s all easier said than done, of course. The technology has yet to be proven beyond the distance of a kilometre, and superconducting cable isn’t being manufactured in that kind of volume – yet. And just because it may be less expensive over long distances than conventional overhead power lines, that doesn’t mean it makes economic sense.
This is why the Institute for Advanced Sustainability Studies in Potsdam, Germany, decided two years ago to explore the approach in more detail. “We’re first researching it to see if it’s possible, if it’s competitive,” says Adela Marian, who is leading the effort. “There needs to be a lot of convincing done at all levels, including industry and government, but we think it has very good potential.”
In North America, Enbridge is one major pipeline company increasingly interested in new transmission opportunities. In 2011 it purchased its first power transmission asset – a 345-kilometre export line connecting Alberta with Montana that is expected to enable the development and sale of wind power.
Still, Enbridge believes pipelines, in the end, may be the better way to move green energy over long distances. Instead of building power lines to transmit green electricity, why not use those clean electrons on site to produce hydrogen gas? That hydrogen can then be injected into an existing natural gas pipeline. The more hydrogen injected in that pipeline over time, the lower the carbon content of the gas inside. The concept is called “power to gas,” and Enbridge’s investment in hydrogen production company Hydrogenics in 2012 is part of its effort to introduce the approach to Canada.
Chuck Szmurlo, vice-president of alternative and emerging technologies at the Calgary-based pipeline company, says pipelines not only can act as a carrier of green energy, they provide a way to store renewable electricity when it’s not needed – all while reducing the carbon footprint of natural gas. “The natural gas system is so big, even a couple of per cent of hydrogen in the mix would represent all electricity from renewables,” he says.
Enbridge’s willingness to experiment shows how different pipeline companies are from utilities. McCall calls transmission operators and owners an “insanely conservative” bunch that never wants to be the first to install a technology. “They want to be the 10th.” Grant says utilities by nature don’t like to stray from the norm. “It’s the hassle factor,” he says. “It presents a new skills set they have to deal with.”
It may be that pipeline companies – which, compared to power utilities, invest much more in research and development – will have to take the lead when it comes to embracing an uncertain future. Whether it’s piggybacking pipelines with next-generation transmission or using gas pipelines to carry and store green energy, it’s clear there are options out there.
Faced down the road with the possibility of having to write off billions of dollars of infrastructure as a casualty of our carbon crackdown, it may be wise to start studying these options now.