Federal Think-Tank Warns Canada's Energy Status Threatened as World Shifts off Fossil Fuel

Canada's status as an "energy superpower" is under threat because the global dominance of fossil fuels could wane faster than previously believed, according to a draft report from a federal government think-tank obtained by CBC News.

"It is increasingly plausible to foresee a future in which cheap renewable electricity becomes the world's primary power source and fossil fuels are relegated to a minority status," reads the conclusion of the 32-page document, produced by Policy Horizons Canada.

The little-known government organization provides medium-term policy advice to the federal bureaucracy, specializing in forecasts that peer a decade or two into the future.

The document was obtained by CBC News under an access to information request and shared with two experts — one in Alberta, one in British Columbia — who study the energy industry.

Both experts described its forecasts for global energy markets as more or less in line with what a growing number of analysts believe.

"It's absolutely not pie in the sky," said Michal Moore from the University of Calgary's School of Public Policy. "These folks are being realistic — they may not be popular, but they're being realistic."

Marty Reed, CEO of Evok Innovations — a Vancouver-based cleantech fund created through a $100-million partnership with Cenovus and Suncor — had a similar take after reading the draft report.

"You could nit-pick a couple of items," he said. "But at a high level, I would say the vast, vast majority of what they wrote is not even controversial, it's very well accepted."

Caution advised in long-term pipeline investments

Given the time frames of a decade or more in the report's forecasts, its language is couched heavily in "ifs" and "coulds."

Its overall conclusion, however, urges caution when it comes to long-term investments in pipelines and other oil and gas infrastructure.

Such investments "could be at high risk of becoming economically unviable as prices in renewable electricity further decline," it warns.

"At a minimum, this plausible future would suggest that governments ensure that the risks of further investments in oil and gas infrastructure be borne by private interests rather than taxpayers," the report reads.

Renewables to become cheaper than fossil fuels

At the core of the report's forecasts is a growing number of indicators that suggest growth in the world's demand for electricity — particularly renewable-based electricity — will outpace other energy types, while the costs of its production and storage fall faster than previously believed.

The demand is expected to be driven largely by the emerging and rapidly urbanizing middle class in developing countries.

Wind and solar systems have the advantage of being "highly scalable and distributable," the report states, making them appealing for communities of virtually any size, with or without an existing electrical grid.

Policy Horizons Draft Report

As a result, emerging economies in Latin America and Africa may follow a different development path than the West and "leap-frog" directly to renewables as a primary energy source in a relatively short timeframe.

"Although any individual country may lack the optimal conditions for every type of renewable electricity, all countries are likely to have at least one or more options to produce electricity from renewables that will be cost comparative or cheaper than generation by fossil fuels," the report reads.

Reed said that trend is already beginning in some parts of the world.

"We just saw Saudi Arabia award a major solar contract at three cents a kilowatt hour. We just saw Mexico do the same thing … at five cents a kilowatt hour," he said.

"You can't bring on a new coal plant or natural gas plant at that price. You sure can't build a new Site C hydro dam at that price."