Introducing the Earth Index

With this bold new index to decarbonize Canada on schedule, we start by tracking the green power wave

The race to net-zero will be a defining feature of the 21st-century global economy, but Canada’s climate change response is stuck at the starting gate. The share of our electricity supply provided by clean, renewable power is stagnating when we need it to be galloping forward, and the fossil fuel share of our energy use is stalled when we need it to be declining dramatically.  

While opinions differ over the speed at which electrification and grid decarbonization must proceed to align with a safe climate future, there is unanimity among analysts that the pace needs to be several times greater than current levels. 

The predictions climate scientists started voicing 35 years ago that climate change could wreck our economy are, unfortunately, proving right on the money. Wilfully blind eyes were turned to the observation that humanity was conducting an uncontrolled experiment on the planet’s life-support systems that could end catastrophically. Our plea for precaution in the face of clearly ecocidal risk was rejected. We have been frozen with fear and doubt when we needed to be hightailing it to a low-carbon future.  

And yet, we still have time. We have not made things easier on ourselves by dawdling, but there are positive, practical pathways forward, perhaps more than ever. Through the uncertainty that clouds our vision of the future, we are beginning to see the shape of an advanced civilization that runs on renewable energy and circular flows of materials, and that works with, rather than against, the magnificent, even miraculous life-supporting systems of the planet. Like the climate crisis itself, it is a future that can and will emerge from the bottom up, that starts from the only place any big system change can begin: here and now. 

The Earth Index 

The Corporate Knights Earth Index is designed to reflect progress toward electrification and toward achieving and maintaining a carbon-free electricity supply. It is a 100-point index in which 50 points are allocated to electrification and 50 points to the share of carbon-free sources in the electricity supply. It is developed here for Canada but uses data sources that are widely available for all countries. 

  1. Electrification. This is simply electricity’s share of the total end-use consumption of all types of fuel and electricity. In 2019, the most recent year for which official statistics are available, electricity accounted for 22% of total fuel and electricity consumption in Canada. At the sub-national level, electricity’s share of energy use varies from 9% in Alberta, where electricity is used almost exclusively for electricity-specific end uses (lights, appliances, electronics, etc.), to 43% in Quebec, where electricity is widely used to provide heat. 
  2.  Clean, renewable electricity supply. The indicator of interest for this part of the index is the percent of domestic electricity use that is provided by clean and renewable sources. The domestic production of clean electricity (minus net exports of clean electricity) is divided by the total production of clean electricity, minus net electricity exports. In 2019, 64% of Canada’s domestic electricity consumption was provided by clean, renewable sources. At the provincial level, the contribution of clean sources to total consumption is at or nearly at 100% in the “hydro-rich” provinces, such as Quebec, and drops as low as 8 to 22% in the provinces that are still heavily reliant on fossil generation. 
The 2019 Earth Index for Canada is therefore: 43. 
Target by 2030: 80. 
Annual improvement required, 2019–2030: +3.6 
Actual annual change, 2016–2019: -0.03 

The Earth Index is intended to measure progress toward the interconnected goals of electrification and a carbon-free electricity supply. An index value of 100 would correspond to a situation in which all the country’s energy needs were being met with electricity, which in turn was provided by clean, carbon-free sources. However, in real transitions not all end uses will be electrified as there will be contributions from other carbon-free sources (such as geothermal, direct solar, biomass and fossil fuel use with carbon capture and storage). A carbon-free future can therefore be envisaged in which the Green Power Index never reaches 100, but values in the range of 70 and higher would be consistent with net-zero futures. (For example, a future in which electricity provided 60% of energy end use and is provided with 100% clean electricity would correspond to a Green Power Index of 80.) 

The index directly reflects progress toward both electrification and attaining and maintaining a decarbonized grid. Efficiency improvements in existing electricity use or in the thermal efficiency of buildings also drive the index up by stretching the supply of carbon-free electricity over more end uses. Increased interprovincial trade in electricity will also push the index up by facilitating flows of clean electricity from the hydro-rich provinces to their carbon-constrained neighbours.  

The Earth Index2019201820172016
Total energy use, all fuels and electricity8,882,0208,852,0528,472,5718,155,257
Of which electricity1,981,4371,967,2391,931,1561,876,494
Electricity share22.3%22.2%22.8%23.0%
Total electricity production, TJ2,303,5662,307,4512,335,8952,324,791
Net exports, TJ169,253173,5432,335,8952,324,791
Therefore available for domestic use, TJ2,134,3132,133,9082,112,1682,045,665
Other renewable609816746707
Total clean power production1,485,8431,496,1141,524,8771,488,743
Less exports of clean power128,983133,648176,824176,228
Available for domestic use1,356,8591,362,4651,348,0531,312,515
Clean electricity as share63.6%63.8%63.8%64.2%
The Earth Index
50*C + 50*N

(All energy figures in Terajoules, TJ)

How much clean electricity do we need to build by 2030?

An effective response to the climate emergency will require increasing the annual production of clean electricity in Canada by 400 terawatt-hours (TWh; 1,440 PJ) by 2030, about double its current level.  

Earth Index Target: Increase in annual clean power production: 400 TWh by 2030. 

The total end-use consumption of electricity in Canada in 2019 was 550 TWh, or about 2,000 petajoules (PJ), of which 413 TWh were provided by clean, renewable sources (mostly hydro). The 550 TWh represents only 22% of total consumption of all types of energy; the other 78% (6,000 PJ) consists almost entirely of the petroleum and natural gas we burn in our buildings, vehicles and factories. In addition, about 18% of electricity is generated using fossil fuels, boosting our overall dependence on fossil fuels in Canada to more than 85%. 

The energy end uses that are “necessarily electric” (lighting, appliances, air conditioning, electronics and small motors for stationary power) make up only 15% of total energy use.4 More than half the energy used in Canada is for heat, mostly for relatively low-temperature space and water heating, with natural gas being by far the dominant source. Another 30% of energy use in Canada goes to powering cars, trucks, and other transportation and off-road equipment and is provided almost exclusively by fossil fuels (mainly gasoline and diesel).  

Any feasible pathway to reducing fossil fuel greenhouse gas emissions to the very low levels needed to align with an effective response to the climate emergency will require deep and rapid electrification of heating and transportation. For this strategy to be effective, we must grow the clean electricity supply fast enough to eliminate the fossil fuel production that is still used for power generation in some parts of the country while at the same time supplying the newly electrified buildings and vehicles. Electricity’s share of total energy use will increase to at least 75 to 80%, and the share of clean electricity must grow from its current level of 67% to 100% and stay there. 

There is some good news. At first blush it might seem that for electricity’s share of total energy use to grow from 22 to 80% the supply would have to quadruple, but this is not the case.  

  • Electric vehicles are up to four to five times more efficient than combustion vehicles, and so the 30% of the energy pie occupied by the fossil vehicles shrinks by a factor of four when the vehicles are electrified.  
  • Similarly, air-source cold climate heat pumps can deliver heat, even at -20°C, with much greater efficiency than furnaces or resistance heaters, so the 35 to 45% of the energy pie occupied by space and water heating shrinks when electrified by a factor of 2 to 3.5, depending on local climate conditions. Ground-source heat pumps and other ongoing advances promise further improvements.  
  • In addition, when the conversions to heat pumps are done simultaneously with thermal upgrades to the building for improved performance, air quality and comfort, the heat load itself can be cut by 40 to 60%, shrinking the low-temperature share of total energy use to 20% of its original size. 
  • When buildings currently heated with electric baseboards are converted to heat pumps, electricity is freed up and peak demand is reduced. In parts of the country where resistance heating is widely deployed, the resulting savings can be used for electric vehicles or to electrify fossil-heated buildings, or to export to neighbouring provinces or states. 
  • Notwithstanding the progress that has been made in the efficiency of lighting, motors, appliances, and electronic and other electricity-using devices, there are still large amounts of untapped efficiency potential that can be deployed to help stretch the clean electricity supply as far as possible. 
  • The combined effect of innovation and shifts in the mix of goods and services produced by the Canadian economy has been moderating the growth in electricity demand for decades now, a trend often ignored or underestimated in forecasts of future electricity demand, and a trend that is likely to continue. An obvious example is the oil and gas production, refining, and pipeline industries, which use 7% of all the electricity in Canada. In a post-fossil-fuel economy, that 7% would be freed up.  

We will be addressing the above challenges in a series of Earth Index events focused on buildings, transportation and other sectors, but we believe that a strategic and coordinated approach to electrification can limit total consumption in the year 2030 to almost double today’s level, making it possible to decarbonize the electricity supply with the addition of annual production of 400 TWh of clean electricity. 

The pursuit of 400 TWh of new clean electricity supply will drive and be driven by other critical changes in the electricity system. While we are not setting specific targets for these trends, they will be part of the annual Earth Index progress review and reporting: 

  • Increased east–west connectivity of provincial grids. There are large disparities in the supply of carbon-free electricity between Canadian provinces, and limited capacity for interprovincial trade. Strengthening east–west connectivity of provincial power grids could facilitate the decarbonization of electricity supply in Alberta, Saskatchewan and Atlantic Canada and the maintaining of a low-carbon power supply in Ontario even as electrification of heat and transportation proceeds. At least 20 TWh of new interprovincial electricity transmission capacity by 2030, targeting the connections between the hydro-rich provinces and their carbon-constrained neighbours, would avoid clean power “lock-in,” create opportunities for east–west system integration, and strengthen the market position of the hydro-rich provinces. 
  • Storage and peak management. The balancing of electricity supply and demand throughout the day and throughout the year has always been a core competency of electricity system operators, but the nature of the challenge is changing with the advent of new technologies for supply, demand control and storage. The importance of this dimension of electricity system management will become even more critical as electricity takes on a large share of total energy needs. Electric vehicles, from the perspective of the grid, represent that advent of millions of portable batteries that will collectively change the way short-term peaks are met. Greater east–west connectivity will allow for more efficient matching of supply and demand across time zones, and for the seasonal storage attributes of hydro reservoirs to be shared more widely. The energy-efficient buildings that will characterize the low-carbon future will have lower energy requirements and longer thermal time constants that will soften their peak impacts. A variety of “prosumer”-owned generation, control, and electrical and thermal storage technologies will facilitate precise and sophisticated management of aggregate demand patterns. And finally, the plummeting cost of batteries and promising developments in seasonal storage options has already begun to redefine the nature of the electricity transition.  
  • The regulatory framework. The regulatory framework for the electric utility sector is no longer fit for purpose. It predates not only the climate emergency but most of the technological and financial developments that are transforming the industry. The minimization of the long-term cost of kilowatt-hours to utility customers can conflict with the goal of minimizing greenhouse gas emissions throughout the economy. 

Transformation of the electricity sector began long before the climate emergency was declared. Many of the changes needed to simultaneously electrify buildings and vehicles while decarbonizing the electricity supply are well underway. Electrification of heating and transportation, large shifts in the relative costs of different generation technologies, growth of distributed generation and storage technologies, a shift from production-centred to consumer-centred business models, and many other developments are all contributing to the reinvention of the electricity sector. This transformation is a global megatrend and is the centrepiece of the multi-trillion-dollar economic opportunity represented by the transition to sustainability.  

Ralph Torrie is Corporate Knights' director of research. 

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