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Members of the Special Committeeon Alternative Energy and Oil Substitution

Chairman: Thomas H. Lefebvre, M.P. — Pontiac-Gatineau-Labelle

Robert A. Corbett, M.P. — Fundy-RoyalGary M.Gurbin, M.P. —Bruce-GreyA. AllteterMacBaln.M.P. —Niagara Falls 5 : :Gary F. McCauley, M.P. —MonctonArthur Portelance, M.P. — GamelinMark W. Rose, M.P. — Mission-Port Moody

Clerk of the Special Committee

J. M. Robert Normand

Research Staff

Project Manager: Dean N. Clay

Peter T.AiwardJudith E.BeangeJohn R. DeGraceBrenda J. DyackJames F. FollwellJohn E.S. GrahamLynne C. Myers

First Session of theThirty-second Parliament, 1980-1981

The Special Committee on Alternative Energy and Oil Substitution has the honour topresent its

THIRD REPORT

In relation to its Order of Reference of Friday, May 23, 1980, your Committee hasexamined the following:

That a Special Committee of the House of Commons, to be composed of sevenMembers to be named at a later date, be appointed to act as a Parliamentary Task Forceon Alternative Energy and Oil Substitution to explore and report upon utilization ofalternative energy sources such as "gasohol", liquified coal, solar energy, methanol, windand tidal power, biomass, and propane for heating oil and vehicles, with special attentionpaid to the feasibility, the impact on balance of payments and overall economic desirability;

That the Committee have all of the powers given to Standing Committees by section(8) of Standing Order 65;

That the Committee have the power to retain the services of expert, professional,technical and clerical staff as may be deemed necessary;

That the Committee, its sub-committees and Members of the Committee have thepower, when the Committee deems it necessary, to adjourn or travel from place to placeinside and outside Canada and that, when deemed necessary, the required staff accompa-ny the Committee, sub-committees or Members of the Committee, as the case may be;

That the provisions of sections (4) and (9) of Standing Order 65 be suspended, unlessotherwise agreed to by the said Committee, in application to the said Committee; and

That, notwithstanding the usual practices of this House, if the House is not sitting whenan interim or final report of the Committee is completed, the Committee may make tne saidreport public before it is laid before the House, but that, in any case the Committee shallreport to the House finally no later than December 19.1980.

NOTE: This mandate was extended by the House of Commons first to 31 March 1981 andthen to 15 May 1981, at the request of the Committee.

vii

ACKNOWLEDGEMENTS

Over the last year this Special Committee has!'called upon theassistance of a'large number of people. We extend our thanks in general here andnote that various appendices to the Report name those who supported or :contributed to the Committee's work.

We first thank the individuals and organizations across Canada whocame forward as witnesses or who provided information and opinions to us. TheCommittee members and the staff have relied heavily upon these thoughtfulcontributions. .-, '••

The Governments of all ten Provinces and of the Yukon and North-west Territories responded to our invitation for meetings. Not only did we benefit ;from the regional views thereby expressed but we also appreciated the fact that ";Government representatives accommodated themselves to the Committee's tightschedule.

Many agencies and facilities welcomed the Committee in its travelsin Canada and abroad. We found such visits to be of great value to the study andthe hospitality which we were accorded was a welcome tonic during a tiringschedule. We asked for the time of many busy people and it was freely given.

The Department of External Affairs gave yeoman service in settingup complex international travel itineraries under pressing time constraints. Manypeople in the Department contributed to the success of this aspect of theCommittee's operation, both in Ottawa and in the countries visited. We are alsograteful to the Departments of National Defence and Transport for providinggovernment aircraft for parts of the Committee's travel, some of which could nothave been otherwise accomplished.

We thank the Research Branch of the Library of Parliament forproviding an unprecedented level of professional research assistance to a Parlia-mentary Committee, and the Information and Reference Branch for supplyingreference material. Other services of the House of Commons, which are oftentaken for granted, should be formally acknowledged. These include the CommitteeReporting Service, the Printing Operations Branch, and Simultaneous interpreta-tion. In holding public hearings in Ottawa and across Canada and in appendingtechnical documents to our Minutes of Proceedings and Evidence, we have placeda heavy burden on these services and we hive been well pleased with the results.To those who performed the secretarial tasks for the Committee we extend ourgratitude for persevering in sometimes trying and hectic circumstances.

Lastly we thank our families who tolerated with patience and goodhumour the excessive demands that the Committee work made upon our time. Weregret that this time cannot be recaptured now that the Report is finished.

ix

TABLE OF CONTENTS

Preface 1

Organization of the Study 3

Afterthoughts 5

1. Introduction 7

2. Energy and Power 13

3. Canada's Energy System Today 19CANADA'S ENERGY USE IN A GLOBAL CONTEXT 23

CONVENTIONAL ENERGY RESOURCES AND RESERVES 27

1. The Resource/Reserve Spectrum 272. Hydrocarbon Resources 273. Hydraulic Resources 354. Uranium Resources 36

ENERGY FLOWS IN CANADA 37

1. Energy Supply, Demand and Trade 372. The Conventional Energy Mix 383. Energy Lifelines 394. Regional Considerations 445. Alternative Energy Use in Canada Today 46

AN EVOLUTION IN ENERGY OUTLOOK 47

THE PROBLEM WITH OIL 51

4. Canada's Energy System Tomorrow 55GUIDING THE DEVELOPMENT 57

1. Conservation and Energy Efficiency 572. Renewable and Inexhaustible Sources of Energy 583. Environmental Concerns 594. Diversity in Energy Supply 625. Regional Considerations 636. Strategic Concerns 667. Social Concerns 68

ELECTRICITY AND HYDROGEN IN CANADA'S ENERGY FUTURE 73

FUTURE TRANSPORTATION FUELS 77

BUILDING A HYDROGEN AND ELECTRIC ECONOMY 79

xi

5. Energy and the Economy siINTRODUCTION 83

ENERGY PRICING 85

1. Energy Pricing in the Past 852. Future Energy Prices and Their Implications 88

THE ECONOMICS OF ENERGY SUPPLY, DEMAND ANDCONSERVATION 91

1. Conservation Defined 912. What Factors Affect Conservation? 913. Conservation Objectives, Decisions and Policies 924. Pricing Criteria for Alternative Energy and Oil Substitutes 935. Demand, Conservation and Prices 946. Delays in Adopting Alternatives 95

ENERGY AND GROWTH 97

1. Energy Consumption and the Gross Domestic Product 972. Energy Consumption by Producers 1003. The Role of New Energy Sources and Technological Change 100

BALANCE OF PAYMENTS, ENERGY TRADE AND INVESTMENT 103

ENERGY AND EMPLOYMENT 107

INCENTIVES 109

6. Alternative Energy Sources, Currencies andTechnologies 113

INTRODUCTION 115

CONSERVATION AS AN ENERGY SOURCE 117

BtOMASSENERGV 123

1. Alcohol Fuels 1252. Biogas 1303. Wood 1324. Peat 135

COAL TECHNOLOGIES 139

1. Combustion Technologies 139

2. Conversion Technologies 142

DISTRICT HEATING 147

ELECTRICAL GENERATION 1511. Combined-cycle Generation 1512. Low-head and Small-scale Hydro-electric Generation 155

FUEL CELLS 157

1. Fuel Cell Technology 1572. Advantages and Difficulties in Using Fuel Cells 1583. International and Canadian Development 159

FUSION ENERGY 161

1. The Nature of Fusion Energy 1612. Advantages and Difficulties in Using Fusion Energy 1663. International and Canadian Development 167

xii

GEOTHERMAL ENERGY 171

1. The Nature of Geothermal Energy 1712. Advantages and Difficulties in Using Geothermal Energy 1723. International and Canadian Development 175

HEAT PUMPS 179

1. Heat Pump Technology 1792. Advantages and Difficulties in Using Heat Pumps 1803. International and Canadian Development 181

HYDROGEN 183

1. The Nature of Hydrogen 1832. Producing Hydrogen 1843. Storing Hydrogen 1854. Transporting Hydrogen 1875. A Hydrogen-based Energy System for Canada 187

NONCONVENTIONAL PROPULSION 191

1. Propane 1922. Compressed Natural Gas 1923. Synthetic Gasoline 1934. Alcohols 1945. Electric and Hybrid Vehicles 1956. Hydrogen 198

OCEAN ENERGY 201

1. Tidal Energy 2012. Wave Energy 2073. Ocean Thermal Energy Conversion (OTEC) 207

SOLAR ENERGY 211

1. The Nature of Solar Energy 2112. Solar Space and Water Heating Systems 2123. Solar-thermal Power Systems 2174. Photovoltaics 2175. Solar Energy: An Appropriate Technology 219

WIND ENERGY 221

1. The Nature of Wind Energy 2212. Advantages and Difficulties in Using Wind Energy 2223. International and Canadian Development 222

7. Recommendations 225

8. Selected Bibliography 235

9 . Appendices 243

A. UNITS AND CONVERSION FACTORS 245

B. WITNESSES AND INTERVENORS AT PUBLIC HEARINGS 249

C. WITNESSES AT INFORMAL COMMITTEE HEARINGS 255

D. OTHER WRITTEN SUBMISSIONS RECEIVED 257

E. COMMITTEE TRAVEL 259

XIII

PREFACE

Chairing the Special Committee of the House of Commons onAlternative Energy and Oil Substitution has been an exciting and appealingchallenge. The experience of working closely for many months with a small anddedicated group of Members of Parliament, supported by a competent profession-al staff, was particularly satisfying. Our mandate was one of the most complex andtechnical ever given a Committee of the House and it demanded months of intensestudy by the Members before they could state, their conclusions candrecommendations. - - ; ; 77 : :„

. - Our work we hope demonstrates that a group of Parliamentarianswith various backgrounds, representing three political parties and possessingdifferent degrees of knowledge about energy, is able to prepare a report which iscomprehensive, credible and understandable to the Canadian public. _

During the public hearings held in Ottawa and in each Province andTerritory, Committee members had an opportunity to hear testimony from privatecitizens, interested groups, professional people, officials from corporations largeand small, and government representatives. Furthermore, officials in a number offoreign countries welcomed our inquiries and opened their doors to us. We couldnot have completed our study without the cooperation and time freely given by allthese people and we sincerely thank everyone who contributed to the Commit-tee's learning process. We hope that this Report justifies the efforts they made onour behalf.

The Committee had to cope with an avalanche of material and it hasbeen an immense task to weigh the opinions and to consider the informationcontained in these documents. Similarly, we found it difficult to present ourfindings concisely. This Report reviews the present energy system in Canada and,by means of its recommendations, suggests ways that alternative sources ofenergy and conservation should be promoted. We hope that our conclusions willconvince Canadians that, while our country does not yet face a true energy crisis,there is an urgent need to find appropriate substitutes for oil and to moveCanada's energy system towards one based upon sustainable energy sources.

Canada has the resources to be a leader in the global energytransition. In this century we have the opportunity not only to secure our ownenergy future, but also to export new energy technologies we develop along theway. We appreciate that this transformation of our energy system will not be easilyachieved, and our recommendations reflect the magnitude of the effort required.We are however optimistic that with a concerted effort, and an enthusiastic andsustained commitment, the task can be accomplished.

Thomas H. Lefebvre, M.P.Chairman

ORGANIZATION OF THE STUDY

The Committee was established on 23 May 1980 and we recognized at the beginningof the investigation that our order of reference required some interpretation. We decidedthat alternative energy would refer to those energy sources, energy technologies and fuels(energy currencies or carriers) not presently exploited in Canada to any significant degree.Coal liquefaction, for example, is a commercial enterprise in South Africa but it is not atechnology developed in this country and thus represented a legitimate area for study.Initially the following subjects were selected for consideration: biomass, coal conversion,co-generation, district heating, fluidized bed combustion, fuel cells, fusion energy, geother-mal energy, heat pumps, hydrogen, nonconventionally-powered vehicles, ocean, solar andwind energy. This list underwent some modification as the study progressed and thesubjects were accorded varying degrees of importance.

The order of reference made no mention of Canada's conventional energy sources:crude oil, natural gas, coal, hydro-electricity and nuclear-electricity. Neither did it mentionthe subject of energy conservation. It soon became apparent, however, that one cannotstudy the potential contribution of alternative energy to Canada's energy system withoutconsidering the manner in which the conventional mix will evolve. Similarly, one cannotdiscuss the evolution of a complex energy system without referring to the impact ofconservation. In other words, although we were not directed to look beyond the area ofalternative energy, we had no choice but to touch upon many elements of Canada's energyaffairs. The Committee was therefore presented with an immense task and, notwithstandingthe extension of its reporting deadline from 19 December 1980 to 15 May 1981, time hasbeen the overwhelming constraint on its operation.

In approaching this task the Committee called upon the services of the Library ofParliament. Eight Research Officers from the Research Branch of the Library, trained in thefields of science and economics, assisted in the Committee's investigation. Six of thesepeople worked with the Committee from the beginning to the end of its mandate.

On 25 June 1980, the Committee opened its first round of public hearings in Ottawa.Concerned with exploring the range of the mandate, these hearings laid the groundwork formore detailed investigation. This phase of the Committee's operation carried through to theend of July and included 16 public sessions.

In advertisements carried in mid-July in most daily newspapers and in a number ofweeklies across Canada, the Committee next invited public submissions relating to itsmandate. Some 150 individuals and organizations corresponded with the Committee inresponse to this advertising, the majority submitting briefs of varying length and complexity.Following the analysis of these submissions in late August, the Committee held publichearings across Canada in the month of September. The domestic travel allowed us to hearrepresentative presentations drawn from the public response to our advertising, to meetwith government officials in every Province and in the Yukon and Northwest Territories, andto see facilities of interest in various parts of the country. The Committee visited the cities ofQuebec, Montreal, Toronto, Victoria, Vancouver, Edmcnton, Regina, Winnipeg, Yellowknifa,Whitehorse. Hay River, St. John's, Halifax, Charlottetown and Fredericton.

In October the Committee turned its attention to the international scene. Dividing intosubcommittees, members and staff visited the United States, Brazil, France, West Ger-many, Italy, Ireland, Sweden and Iceland. Meeting with government officials and representa-tives of the private sector and visiting selected energy facilities, we learned much about thealternative energy programs in those countries.

Having acquired some perspective on development., abroad, it was time to add depthto the inquiry and a final round of 28 public hearings was held in Ottawa. Those hearingspursued more detailed aspects of alternative energy and were completed on 11 December1980. Thereafter the Committee began preparing its Report to Parliament.

During its study the Committee exercised its authority to retain the services of experts.Assistance on specific issues was provided by Middleton Associates of Toronto, by theEconomic Council of Canada and by Professor John Holdren of t'.ie University of Californiaat Berkeley. To help convey its ideas and findings to the public, the Committee hired thegraphics firm Les Illustrateurs of Hull, Quebec and Rockland, Ontario. And, under the aegisof the Library of Parliament, the Committee engaged Professor Benoit Jean, of the Institutnational de la recherche scientifique in Varennes, Quebec, to provide peer review for thefinal Report.

The reader will note that the order of reference directed the Committee to report uponthe "utilization of alternative energy sources". We recognize the point of view whichstresses dealing with the demand side of the energy equation rather than the supply side.While we agree that the management of energy demand is of at least comparableimportance in Canada, our Report necessarily treats only the subject of alternative energysupply in detail.

We further recognize that our investigation has not exhausted all avenues of approacheven in the restricted domain of alternative energy. Rather we have laid the subject out inbroad terms, leaving many signposts along the way whtre we think more detailed work isdesirable (or essential). In so doing, the Report outlines the Committee's view of theappropriate evolution of Canada's energy system.

Our final comment here is a technical one. Energy statistics can be baffling bothbecause of terminology (not always consistently used) and because Canada has recentlyinstituted a new system of measurement (SI or the International System of Units). In thespirit oi "going metric", we have emphasized the r,c.v system in this Report while puttingconsiderable effort into showing the equivalence between English and SI units. The problemof terminology in the energy field is less easily handled. We have selected those definitionswhich seemed most appropriate for our purposes and have tried to be consistent in theirapplication. Terms and concepts are defined as they arise, and units and conversion factorsare gathered into Appendix A for ease of reference. Monetary values are understood to bein current Canadian dollars unless otherwise specified.

AFTERTHOUGHTS

In a number of ways the operation of the Special Committee on Alternative Energy andOil Substitution has represented a departure from normal Committee operation. This is alsotrue for the other five Task Forces established at the same time but, to our knowledge, noCanadian Parliamentary Committee has ever before been given such a technically demand-:ing subject for investigation. This led to an unprecedented commitment of professionalsupport to a Committee by the Library of Parliament. In another departure, the researchstaff was allowed to participate regularly in questioning during public hearings and duringvisits to other countries. Upon occasion, the staff also was given the opportunity torepresent the Committee when Members themselves were unavailable. Given the technicalnature of the mandate, the rapport these new developments engendered between Commit-tee members and staff allowed for a broad and detailed exploration of energy issues.

As elected representatives, Parliamentarians are entrusted with managing the public'saffairs. This has never been an easy task, but recently it has become even more difficult associety is faced with increasingly complex and technical issues, not the least of which ishow to deal with energy matters. Thus if Members of Parliament are to handle theirlegislative responsibilities effectively, especially with regard to technical matters, some newapproach to help cope with this complexity must be considered.

We have found that the vehicle of a "Special Committee" has been an effective meansof developing the expertise of Members in new fields. And to the extent that this style ofcommittee operation allows Members to educate themselves in specialized areas, it alsoserves to expand Parliament's body of knowledge. This is because a Special Committeeallows a small group of Members to study a subject in more detail than has typically beenpossible under the Standing Committee system. We found that a committee membership ofseven was almost ideal for our purposes. • -

Beyond the fact that seven Members of Parliament have been given a uniqueopportunity to develop their thinking on the subject of alternative energy, our Parliamentarysystem benefits in another way. The knowledge garnered by the Committee's research staffalso remains at the service of Parliament since that staff was drawn from the precincts ofthe Hill. This facilitates the transmission of new information to other Members.

We regard the establishment and operation of the Special Committees as an importanttest by the Government in strengthening the Committee system. We believe that ourexperience with a small specialized committee points the way to dealing with many of thecomplex issues facing Parliament today and promises to provide Members with moreresources for and confidence in approaching such matters. We recommend that theGovernment consider building upon the experience of these Task Forces with a view toincorporating some features of their operation into the regular Committee system.

Introduction

I n fifty years Canada's energy system will be radicallydifferent. We foresee a system based upon electrici-

ty and hydrogen as the major energy carriers or curren-cies, with only minimal and selected' use of hydrocar-bons (crude oil, natural gas and coal) as fuels. Electricpower will be generated in several ways, with the hydro-gen produced primarily through the electrolysis of water.Drawing upon the sun's radiation and to a lesser extentupon the Earth's heat flow, our society will be able tosatisfy much of its need for the low-grade thermalenergy used in space and water heating and for industri-al heat.

Our reasons for believing that Canada's energysystem should be directed away from hydrocarbons inthe long term are two-fold: first to counter the otherwiseformidable environmental problems we see arising in thenext century, especially if coal becomes a principalelement in our energy supply; and second to preservecrude oil, natural gas and coal for such non-energy usesas the production of petrochemicals.

The Committee is troubled by past failures to antici-pate many of the environmental consequences ofexploiting various forms of energy. We wish to see thisimpact considered much more carefully in the future.Our lack of enthusiasm for coal as a principal supplier ofenergy in the next century, for example, arises directlyfrom such environmental concern. We recognize ofcourse that no new energy source or technology iscompletely environmentally benign but some can bepreferred over others, and environmental impact shouldbe one of the prime considerations in setting priorities.

We realize that Canada does not have theresources to pursue all avenues of alternative energyinvestigation, and that results can be diluted by attempt-ing too much. But given the uncenainties inherent in anycourse of action, the Committee wishes to see Canada'senergy options kept as broad as possible. Priorities inthe alternative energy field will have to be assigned onthe best estimates of today, and there are few energysources and technologies which we would want to seetotally ignored in this country.

In reviewing energy prospects, we cannot considerCanada in isolation from developments in other parts ofthe world. Global population now exceeds four billionand is expected to surpass six billion by the year 2000.It has been observed that anyone with a present lifeexpectancy of 50 years may live to see a world inhabit-ed by 10 billion people. Sustaining those numbers andimproving the human condition beyond the abysmalstate characterizing substantial regions of the worldtoday will require a much expanded use of energy indeveloping countries.

Energy conservation (with conservation referring toboth frugal and more efficient use) is a fundamentallyimportant strategy which should carry forward far intothe future. In fact, the Committee considers thatrestraining growth in energy demand will offer the bestreturn in managing Canada's energy affairs throughoutthe remainder of this century at least. Many of the newtechnologies which we consider in this Report promisesignificant energy-conserving benefits. In the longer run,conservation becomes built in to our system andincreasing efficiencies in energy use become more dif-ficult and costly to achieve. At some point energy supplyreasserts itself as the foremost concern in an expandingsystem.

Turning to other energy options, Canada shouldexploit biomass (carbon-containing material of plant andanimal origin not including fossil fuels) as rapidly as isfeasible, subject to certain reservations. Forest or cel-lulosic biomass will assume an important position inCanada's changing energy system, especially in theprovision of transportation fuels. Thereafter, althoughbiomass will continue to be a substanti . provider ofenergy, we foresee its relative importance declining forenvironmental reasons and because of increasing pres-sure on the Earth's land base to feed the world's bur-geoning population. Thus the Committee views biomassenergy as playing its most significant role over the nextfew decades

Geothermal energy, the natural heat of the Earth, isa more enigmatic player in the energy game. In thiscentury geothermal energy will have little impact onCanada's energy affairs. In the next century, the poten-tial of this energy form hinges on the success of newapproaches to its exploitation, something which is dif-

ficult to gauge today. Our conjecture is that geothermalenergy will be a substantial contributor to Canada'senergy system in the twenty-first century.

Wind energy will be a modest contributor in Cana-da's future energy mix. In according it this secondaryimportance domestically, we nonetheless see a substan-tial opportunity for Canada to develop an exportablewind energy technology. Unless seized upon quicklythough, this opportunity will be lost since other nationsare developing this technology as well.

Beyond saying that electricity should not be gener-ated through the combustion of fossil fuels, the Commit-tee is not able to state what methods will be used toproduce the bulk of Canada's electric power in the nextcentury. Obviously Canada will continue to develop itshydraulic resources but, equally cloarly, hydro-electricitycan satisfy only a part of future needs. Solar radiationwill be exploited for electric power production but wesee that use coming in specialized applications or set-tings. (The principal contribution of solar power willprobably be in the supply of low-grade domestic, com-mercial and industrial heat.) Nuclear power, by means ofthe fission process or perhaps ultimately through thefusion reaction, is capable of providing electricity on anindefinitely large scale. Exploiting nuclear energy, how-ever, is one of the more contentious political issues oftoday and whether or not Canada utilizes this source ina major way in the twenty-first century is a questionwhich goes well beyond that of the adequacy of supply.

Recent discussions on energy matters in the indus-trialized nations have frequently been concerned withthe relative merits of two policy paths. The hard energypath is described as a high-energy, nuclear, centralizedand electricity-dependent route; the soft energy path ispresented as a lower-energy, nuclear-free, decentralizedand less electrified route. The Committee regrets thisstructuring of the debate into one characterized by onlytwo choices — a "soft" or a "hard" energy alternative.It is misleading to the public to suggest that there is onlyone obviously correct path for Canada's complexenergy system to follow, or to suggest that our energyfuture must be selected on an either/or basis. We donot debate the fact that the world's energy requirementsmust ultimately be met from sustainable sources. Whatis debatable are which sources will be exploited and towhat extent, the length of time the restructuring of ourenergy system will require, and the route by which thatrestructuring will be achieved. These are highly com-plicated matters and their resolution will only be mademore difficult by pursuing the debate in simplistic terms.Canada's energy choices will in part be governed byopportunity and in some cases by necessity. We mustkeep in mind too that Canada has a huge investment inits existing energy system, an investment from which thecountry will have to obtain as much return as possible. It

is therefore our conclusion that Canada's energy systemwill be a mix of hard anri soft technologies combinedwith a blend of centralized and decentralized sources asfar as we can see into the future.

There will nevertheless be a fundamental recastingof our national energy system, the foundation for whichwill be laid over the next two or three decades. Duringthis transitional phase, natural gas, coal, hydro-electrici-ty and nuclear-electricity will be exploited on a largerscale than today, both because of projects presentlyunder construction and because Canada must empha-size some of these sources in progressively reducing itsdependence upon petroleum. The increased importanceof natural gas and coal will be transient, however, andthe significance of these commodities will in turn dimin-ish in the next century as alternative forms of energy arebrought into wider use.

Society can tolerate the increased use of someenergy commodities over a limited period of time even ifit is not prepared to exploit certain energy forms indefi-nitely. Canada can, for example, promote a technologysuch as fluidized bed combustion to reduce the environ-mental repercussions or burning coal. But the Commit-tee is not prepared to recommend that coal be thecentral element of a Canadian energy system fifty yearsfrom now. As already indicated, we believe that theenvironmental price would become larger than societyshould be asked to pay. For parallel reasons we do notrecommend the completely unrestricted use of biomassas a source of energy in the future. We have concludedthat the environmental implications of such exploitationare not adequately understood.

It is one thing to say that Canada has a broad rangeof energy opportunities and that we should get on withthe job of pursuing them. It is quite another matter toascertain whether or not this country actually has themeans and the will to capitalize upon these opportuni-ties. Canada has not demonstrated that it possesses theresearch and development capability to accomplish abasic restructuring of its energy system. Canadians havenot yet indicated that they are willing to pay the cost ofpursuing new energy options to commercialization, andCanada's resources of professional and skilled manpow-er are not so extensive that one can be complacentabout our ability to get the job done. In short, theCommittee considers that Canada is not adequatelyprepared to accomplish what Canadians are now begin-ning to agree should be done.

We do not lay the blame for this unreadiness at thefeet of Canada's scientists and engineers — indeed, theCommittee was frequently impressed with what is beingaccomplished with meagre resources. We do fault themanagement and sometimes erratic support of R&D inthis country. The energy initiatives put forward in this

10

INTRODUCTION

Report add up to a major effort in restructuring ournational energy system — we do not think it can beaccomplished given the way energy R&D is pursued inCanada today. Canada's unimpressive record in com-mercializing the fruits of research is another cause forconcern. Simply calling for more funds for alternativeenergy development will not be sufficient.. :_.::*

: The Committee has therefore concluded that a newapproach to managing development in the alternativeenergy sector is required. We recommend that a Ministryof State for Alternative Energy and Conservation beestablished under the Ministry of Energy, Mines andResources. We further recommend that the new alterna-tive energy corporation, Canertech, report to the pro-posed Minister of State when it becomes an independ-ent Crown corporation. ; To promote the broaddevelopment of hydrogen as an energy currency in

Canada, we recommend that a Canadian HydrogenCommission be es ablished, also reporting to the pro-posed Minister of State.

Canada is not in an energy crisis. The Committeedoes, however, feel a strong sense of urgency aboutchanging energy policy for a number of reasons, not theleast of which is Canada's vulnerability to external de-,velopments in the petroleum sector (a vulnerabilitywhich could lead to an "oil crisis"). We further feel asense of urgency because Canada is being left behind inthe alternative energy field even though it has a lot tooffer and in some new technologies holds a temporaryadvantage. Canada must respond to the alternativeenergy challenge more quickly or be placed in theparadoxical position of having a wealth of energy poten-tial but a shortage of energy options because of a failureto capitalize upon that potential.

11

Energy and Power

an does not understand what energy is despite thefact that it is intrinsic to every part of his environ-

ment. We learn in school that energy represents theability to do work, that literally nothing can be accom-plished without the expenditure of energy and thatenergy exists in a variety of forms which can be charac-terized by mathematical formulae. We discover that itcan be described as gravitational potential energy, elas-tic energy, radiant energy, heat energy and so forth, butwe cannot state what energy actually is.

While this state of affairs may seem disconcerting, itdoes not represent any difficulty in what we are consid-ering here. The United States could not have put a manon the moon if accomplishing that feat had meantunderstanding the force of gravity. What was requiredwas a mathematical expression describing the action ofgravity so that the proper flightpath of the Apollo space-craft could be computed. Since Isaac Newton hadobliged NASA by formulating his law of gravitationnearly three centuries earlier, that lack of understandingwas not a barrier to success.

So it is with our study. We need only to understandthe behaviour of energy in its various manifestations.Man has learned, for example, that energy is conserved;it is neither created nor destroyed in being transformedfrom one type to another. Thus, while we speak looselyof "consuming" energy, we really mean that we areexploiting it for some purpose. An important result ofthis law of nature — the law of energy conservation —is that one unit of measurement can therefore be usedto quantify all forms of energy. In the SI (SystèmeInternational) scheme of measurement being adopted inCanada that unit is the joule. The reader is referred toAppendix A of this Report for a discussion of units andconversion factors.

Another fundamental energy relationship concernsthe direction which energy transformations take. Exploit-ing energy invariably results in changing it to a lessuseful form. (This idea of the "usefulness" of variousforms of energy is dealt with in a branch of physicsknown as thermodynamics — a subject which we needonly touch upon here.) Although the concept is subtle, ithas been well expressed by the American scientist M.K.Hubbert.

The Equivalence of Energy and Mass

A profound extension to the law of conserva-tion of energy was provided by Albert Einsteinwho showed theoretically that there is an equiva-lence between energy and mass. This equivalencewas embodied in his famous equation: energyequals mass multiplied by the square of the veloci-ty of light (E = me2). Einstein's equation is normal-ly applied in circumstances which are far beyondman's everyday range of experience and onlybecomes relevant, for example, in examining thesubject of nuclear energy.

We recognize that life on Earth is sustainedby the output of an immense fusion reactor — thesun. Solar radiation dominates all other forms ofenergy delivered into the Earth's surface environ-ment and that energy is the product of hydrogennuclei fusing within the sun's core, in a processwhich converts mass into energy.

...not only is energy continuously transformed fromone form to another in processes occurring on theearth, but these transformations occur irreversiblyfrom a form of higher availability to one of loweravailability. During the process the energy, while notdestroyed, is progressively degraded in terms of itspotential usefulness, and finally ends up as heat at thelowest environmental temperature. From this statethere is nowhere else for the energy to go except bylow-temperature, long-wavelength thermal radiationinto the still colder regions of outer space. (Hubbert,1974, p. 8)

Expressing the idea another way, there is no such thingas a perpetual motion machine because there areenergy losses in any process.

In many situations we are interested in measuringhow fast energy is being or can be delivered, for exam-ple at a power station. Power refers to the rate at whichenergy is being dissipated or converted. Since all typesof energy are measurable in joules, it follows that therates of all types of energy transformations are measur-able in a common unit and the SI unit of power is thewatt. One watt is defined as the delivery of one joule ofenergy per second. A 500 megawatt electrical generat-

15

Measuring Energy and Power

In the science of mechanics, energy wasoriginally defined in terms of work, which is theproduct of a force acting through a distance. In SInotation, the unit of energy is the joule and isdefined as a force of 1 newton acting through adistance of 1 metre, or

1 joule = 1 newton-metre.Other forms of energy such as heat were

originally considered to be independent quantitiesand thus independent units of measurement weredefined to quantify them. Now that we know thatthe various forms of energy are equivalent, how-ever, we can use conversion factors to go fromone type of measurement to another. Before theSI scheme was adopted, the energy content ofsuch commodities as crude oil, petroleum prod-ucts, natural gas and coal was normally expressedin British thermal units (Btu) while quantities ofelectrical energy were described in kilowatthours(kWh). The appropriate energy conversion factorsare

1 Btu = 1,054 joules = 1.054 kilojoules, and

1 kWh = 3,600,000 joules = 3.6 megajoutes.

Power is a measure of how fast energy isbeing or can be delivered. Thus power equalsenergy divided by time. The SI unit of power is thewatt, which is defined as

1 watt ~ ] i ° u l e •1 second

When work is being done at the rate of 1joule per second, the power involved is 1 watt.Since all types of energy are measurable in joules,the rates of all types of energy transformations aremeasurable in watts. In the past, power was typi-cally expressed in Btu per hour, watts or horse-power, so we require the power conversions

.1 Btu per hour = 0.293 watt, and

1 horsepower = 746 watts.

When power is generated at a constant rate,the amount of energy produced in a given time is

energy = power x time.

In other words, 1 joule = 1 watt-second. To take afamiliar example, we pay our electricity bills on thebasis of the number of kilowatthours of electricalenergy we have used over the billing period. Tocalculate the energy represented by one kilowatt-hour, we multiply power by time, or

1 kWh = 1,000 watts x 3,600 seconds (in onehour)

= 3,600,000 watt-seconds

= 3.6 mega joules.

ing station is one which is capable of delivering 500million watts of electrical power.

Since the joule and the watt are small measures ofenergy and power, we will be working with multiples ofthese units. Five prefixes in the SI scheme cover most ofthe quantities used in this Report, as shown in thefollowing examples.

SI PREFIX SYMBOL VALUE EXAMPLE

kilo k 103 (thousand) kilovolls (kV)mega M 106 (million) megatonnes (Mt)giga G 109 (billion) gigawatthours

(GWh)tera T 1012 (trillion) terawatts (TW)peta P 1015 (quadrillion) petajoules (PJ)

If the reader will keep in mind these five multipliers, thenhe will understand references to an electrical transmis-sion line in kilovolts, to Canada's annual coal productionin megatonnes, to Quebec's sale of electrical energy tothe United States in gigawatthours, to world electricalgenerating capacity in terawatts, and to Canadianenergy demand in petajoules.

Let us now consider the Earth's natural energybudget or the manner in which energy flows through ourplanet's surface environment. Since we are looking atrates of energy flow, we are concerned with measuringpower. And, because the amounts of power involved arevery large, the unit which we will employ is the terawatt(1012 watts or trillions of watts).

Energy inputs to our environment come from threesources: (1) solar radiation intercepted by the Earth;(2) tidal energy derived from the combined gravitationalfields of the moon and sun; and (3) geothermal (orterrestrial) energy reaching the Earth's surface from itshot interior. Energy losses from the Earth can be con-sidered in one of two categories. First, approximately30% of the incoming solar radiation is directly reflectedby the atmosphere into space as short-wave radiation.Second, the remaining solar energy, together with thegeothermal and tidal energy, undergoes a sequence ofirreversible degradations in our environment, reachingan end stage as heat at the lowest local temperature. Inthis state it is radiated from the Earth into space aslong-wave thermal radiation.

Figure 2-1 is a generalized representation of theenergy flow through the Earth's surface environment. Ascan be seen from the illustration, solar radiation domi-nates this flow, being estimated at a power of 174,000 x1012 watts. The terrestrial energy flow is more than threeorders of magnitude smaller at an estimated power of 32x 10'2 watts. Even smaller is the input of tidal energy at3 x 10'2 watts. In other words, the relative power inputsin units of terrawatts are:

solar radiation 174,000geothermal power 32tidal power 3

16

ENERGY AND POWER

Figure 2-1: THE EARTH'S ENERGY BUDGET

O N G - W A V E R A D I A T I O N

Source: After Hubbert. 1974. p. 11.

By a huge margin, the largest source of energy availableto the Earth is sunshine.

The obvious question then is how does this naturalflow compare with society's energy needs? Acceptingthe estimate that the annual global demand for primaryenergy now exceeds 300 exajoules (300 x 10™ joules),we can roughly calculate that man is today convertingenergy for his own use at an average rate of nearly10 x 10" watts, or 10 terawatts. Clearly the world is notrunning out of energy in any absolute sense. What is inquestion is the continuing availability of inexpensive,easily accessible energy in forms that society finds envi-ronmentally acceptable and convenient to use.

Man has the following options to derive the energyrequired to sustain his society. He can intercept theenergy continuously and inexhaustibly flowing throughhis natural environment as outlined in Figure 2-1; he cancontinue to draw upon the finite amount of energystored in fossil fuels; or he can convert mass into energyvia the processes of nuclear fission and, potentially,nuclear fusion.

Turning from nature to the flow of energy in anindustrial society such as Canada's, we find it necessaryto consider energy at several stages of use. Energycommodities at the point of production are referred toas primary energy. Crude oil, raw natural gas, coal,hydro-electricity and nuclear-electricity are the familiarprimary energy commodities in Canada. Hydro-electrici-ty and nuclear-electricity are used directly by consum-ers, as is most of Canada's natural gas production.Some primary energy is converted into other formsbefore being consumed. Petroleum products, electricityderived from the combustion of coal, oil or gas, andcoke produced from coal are examples of primaryenergy conversions.

Energy delivered to the point of use is typicallyreferred to as secondary energy or end-use energy.Since energy is invariably consumed in conversions andtransmission or transportation, the secondary energysupply in a region or country is necessarily smaller thanthe primary energy supply (apart from energy imports,exports and changes in stocks).

17

Some workers carry the accounting a step furtherto the level of tertiary energy, the energy which actuallyperforms useful work at the point of application. Forexample, electricity consumed in a home is utilized inpart to provide lighting. The efficiency of a light bulb inconverting electricity into radiant energy (light) is nor-mally less than 5%. Thus the secondary energy deliv-ered to the light bulb results in a conversion to usefulwork, or tertiary energy, of only a few per cent. In acontrasting illustration, electricity used in home heatingis almost 100% efficient in the conversion of electricalto thermal energy; in this application the secondary andtertiary energy values are nearly equal.

If one wants to account for the actual work accom-plished in our society from the beginning to the end ofthe energy system, then it is necessary to considerenergy consumption at the tertiary level. In this Report,however, we will only be taking energy demand to thelevel of secondary energy, or the point of end use.

A complication arises in the accounting process forelectrical energy. At a modern, thermal-electric generat-ing station, approximately three units of heat arerequired to manufacture one unit of electricity (that is,the efficiency of energy conversion is 35% or less). At a

hydro-electric station, the energy contained in the fallingwater may be converted into electricity with an efficien-cy in excess of 90%. How then should a country valueelectrical energy — by its true energy content (3,600kilojoules to the kilowatthour), or by the quantity ofthermal energy required to generate it at a thermal-elec-tric station (approximately 10,500 kilojoules to the kilo-watthour)? If one adopts the higher energy value for allelectrical generation including hydro, as is EMR'scustom, then one calculates that hydro-electricity sup-plies nearly 25% of Canada's primary energy. Using thetrue energy value for electricity, one finds that hydro-electricity only represents about 11 % of primary energyproduction.

We have chosen in this Report to value hydro-elec-tricity by its true energy content. Thus our values forCanada's total energy consumption will be lower thanEMR's figures and hydro-electricity will be accorded asmaller share of Canada's primary energy mix. We havedecided to use true energy values, based usually onStatistics Canada data, because we consider them toprovide a clearer picture of our national energy system.Such differences in the reporting of energy statisticspoint out the need for care in using data from a varietyof sources.

18

Canada's Energy

An industrialized nation requires energy in various forms — gasoline,heating oil, diesel fuel, pipeline quality gas and electricity to name some of themost obvious ones. It also requires thermal energy over a broad range oftemperatures, whether for taking a bath, operating a smelter or generatingelectricity. Given this spectrum of requirements or demands for "end-use energy",energy systems in the developed world have become quite complicated, especiallysince World War II. The complex web of energy sources, conversion devices,transmission systems, energy carriers or fuels, and energy-consuming devices orinstallations may be collectively referred to as the national energy system. Cana-da's energy system reaches into the most remote communities in the land and inthe post-war period became such an integral part of our lives that we normallythought little about it.

But the 1970s were not normal times and we have been forced toreassess the manner in which our society uses energy. That reassessment has ledto two basic conclusions: the rate of growth in the demand for energy in Canadamust be decreased, and our energy system must ultimately be shifted from onedominated by fossil fuels to one which runs on sustainable sources of energy.

While it is easy to state that these changes must take place, it isquite another matter to determine the route by which this will be accomplished.This Report gives our vision of Canada's energy path to the future. To see wherethat path leads, we begin with where the system stands today.

21

Canada's Energy Usein a Global Context/Canadians have been called the world's worstv ^ energy gluttons. While this is not true in a strictsense, there being several countries which consumeenergy even more voraciously than we do on a percapita basis, Canada is so close to the top that thisdistinction is not particularly comforting. Figure 3-1presents the per capita consumption of commercialenergy in selected countries, based upon United Nationsdata.

If Canada's energy use is measured in terms ofenergy consumption per dollar of economic output(Gross Domestic Product), as is illustrated in Figure 5-5in the chapter Energy and the Economy, the internation-al comparison is equally distressing. Most other industri-alized nations typically require only 60 to 80% as muchenergy to generate each dollar of Gross Domestic Prod-uct. How did Canada come to be in such an unfavour-able position and what are the implications of thissituation?

There are numerous factors which contribute tohigh energy/GDP ratios. For instance, the more energy-intensive industries there are forming a country's eco-nomic base, the higher the ratio of energy to GDP willbe. In Canada we have many industries which fall intothis category, including aluminum smelting, iron andsteel production, cement manufacturing, petrochemicalproduction and resource extraction, among others.Indeed, the energy extraction industries themselves aresubstantial energy consumers.

In addition to the industrial makeup of the Canadianeconomy, our cold climate and the resultant spaceheating load raises energy consumption still higher. Thelarge distances over which goods must be transported

and people must travel in this country dictate that ourtransportation sector will also be a major consumer ofenergy.

It could be argued though that many of the factorscontributing to greater energy use in Canada also prevailin other countries, geographical extent excluded. Thisbrings us to one of the most important factors governingCanada's energy consumption — the past availability ofplentiful, cheap, domestic energy supplies. Canada isone of the richer countries in the world in terms ofresources and over the years this comparative advan-tage has been an underlying factor in our social andindustrial development. Consumers, for example, hadlittle incentive to insulate homes thoroughly becausebuying more fuel oil was less expensive in the short run.In industry the cost of energy was low relative to othercosts such as labour and capital and its efficient usewas not an overriding factor in making decisions onprocessing or manufacturing options. It is largelybecause of this ready availability of inexpensive energythat Canadian energy demand has evolved to the stateshown in Figure 3-1.

The dramatic price increases for oil on world mar-kets in 1973-74 drove home the realization that our ownreserves of conventional and inexpensive oil were beingrapidly depleted. Consequently the magnitude of Cana-da's energy demand and the heavy dependence of oursystem upon petroleum became sources of concern. Inthe future Canada will clearly have to use energy moreefficiently in the manufacturing sector if it is to maintaina competitive position in world markets. When choosingenergy alternatives to replace oil, therefore, we must bemindful of the cost of the substitutes so as not to worsenour competitive position.

23

Figure 3-1: 1978 PER CAPITA CONSUMPTION OF COMMERCIAL « ENERGY IN 15 SELECTED COUNTRIES

UNIT: Hognim m ol tqulvikint ptr cipiu

(5) Commercial energy refers to energy which enters into trade. Data on non-commercial energy use are scarce and imprecise.

Source: After United Nations, 1980.

THE ENERGY SYSTEM TODAY

In a more general sense, the industrialized worldmust also be concerned with its need for energy relativeto the developing world. Figure 3-2 shows very clearlythat the gap in per capita energy demand betweenthese two parts of global society has widened over thelast two decades. At the same time, oil has risen to adominant position in satisfying world requirements forenergy (Figure 3-3). Industrialized nations, with theirdiversified energy systems, have better prospects for oilsubstitution than do developing countries which, as agroup, depend even more heavily upon petroleum. It isapparent from this perspective that a much better bal-ance must be achieved in the global use of energy, bothregionally and by energy source. ; T '

The degree to which the distribution of energyconsumption varies across the world's population isclearly indicated in Figure 3-4. The total demand forprimary energy worldwide in 1975 was estimated at 8.2terawatts, summed over the year (that is, 8.2 TW-years).The rate of energy consumption in a world then populat-ed by almost four billion people therefore averaged out

Figure 3-2: PER CAPITA GNP AND DEMANDFOR ENERGY IN THE DEVELOPEDAND DEVELOPING NATIONS, 1960-1977

Developed NationsEnergy

(kilograms)

MP(1976$)

Developing Nations

6000

4000

2000

1960 1965 1970 1975Note: Per capita demand for energy is measured

in kilograms of coal equivalent per person.

Source: Sivard. 1979, p. 11.

Figure 3-3: WORLD PRODUCTION OF PRIMARYENERGY, 1950-1977

Billion metric tonsof coarequivalent Oil

1950 1960 1970Source: Sivard, 1979. p. 7.

to about 2.1 kilowatts per person. As one can see fromFigure 3-4, however, the top 5% of the world's popula-tion consumed energy at an average rate of more than10 kilowatts per person, while the bottom 50% dis-played an average rate of energy consumption of lessthan a kilowatt per capita.

The world's population is presently estimated to begrowing at a rate of very nearly 2% per year, sufficientto double it in 35 years. Even allowing for some slacken-ing in the rate of growth, man's numbers appear almost

'certain to be about 50% larger in the year 2000 thanthey are today. And most of that expansion will occur inregions amongst the lowest in par capita energy usetoday. Thus the concern with conserving energy in thedeveloped world is not shared by the majority of theworld's people. Just to maintain the present per capitause of energy over the coming 20 years will requireincreasing the global supply of energy by more than50%. There is no conceivable way in which the conser-

25

vation of energy in industrialized society can approachthe requirement for new energy supplies in the develop-ing world just to offset population growth. Consequently,for most of mankind, the dominant issue in energyaffairs is increasing the supply of energy at an affordablecost.

To close this brief review of the world energy scene,we compare twentieth century rates of growth in popula-tion and energy demand (Figure 3-5). Since 1950 theworld has witnessed an extraordinary phenomenon:while observers were expressing alarm over man's bur-geoning numbers in the post-war period, the demand forenergy was escalating at a rate approaching four timesthat of the population. This is indeed a remarkable (buttransient) period in man's tenure of this planet.

Figure 3-4: GLOBAL DISTRIBUTION OF PRI-MARY ENERGY CONSUMPTION IN1975

Figure 3-5: THE GROWTH IN WORLD POPULA-TION AND ENERGY DEMAND, 1900-1977

Energy in billion metric tonso1 coal equivalentPopulation in billions

1900 1920 1940Source: Sivard, 1979. p. 6.

1960

20 40 60 80 100

FRACTION OF POPULATION (PER CENT)

Source: Sassin. 1980. p. 120.

26

Conventional EnergyResources and Reserves1. THE RESOURCE/RESERVE SPECTRUM

To understand what is meant by energy availabilityin Canada requires an appreciation of the termsreserves and resources. Consider the following quotefrom the 1926 Book of Popular Science which reflected awidely held view of the time:

...it is apparent that the supply of petroleum will soonbe exhausted, and even now gasoline is becomingexpensive. New and advanced methods of productionmay add to our supply somewhat, but unless new oilfields are discovered, the end of this commodity is notfar off. We must look elsewhere for fuel for automo-biles. Distillates from vegetable products can be madethat will work well in gas engines and the hope of thefuture appears to lie in this direction. (The Book ofPopular Science, Grolier. N.Y.. 1926. p. 570)

The authors further predicted that the automobilewas destined to play a diminishing role in American life,with the horse returning to a well-deserved position ofprominence. The statement contains elements of fact astrue in 1981 as they were in 1926, but the erroneousconclusion was based on a misinterpretation (or igno-rance) of the distinction between reserves in the groundand ultimately recoverable resources.

Any estimate of a country's natural energyresources — be they petroleum, forests, or windenergy — must specify cost criteria and a time frame forexploitation unless we are speaking of an ultimate"resource base", a concept which has little applicationin any practical sense. It is apparent, then, that mean-ingful long-term forecasts of resource availability cannotbe made because the course of technological advance,politics and economic policy is unpredictable.

Figure 3-6 provides a framework within which anynatural resource can be categorized. Although its useful-ness is biased towards "nonrenewables" such aspetroleum, natural gas, coal and uranium, one can seehow the spectrum of potential hydro-electric generationsites or biomass energy production schemes, to givetwo examples, could be assigned places on an adapta-tion of the diagram. Looking at natural gas for instance,it is apparent that all such deposits can be assigned toone or another quadrant of the figure, with currently-

producing fields belonging to the "reserves" quadrant.Other gas resources are either known and uneconomic,or undiscovered, whether economic or not.

The missing dimension in the diagram is that oftime. As time progresses, the positions of all depositsplotted on the graph tend to move towards the "extrac-tion and processing" arrow: subeconomic resourcesbecome economic; undiscovered resources are dis-covered and eventually become economic. Neverthe-less, the path taken by a specific deposit over time maybe a tortuous one. What factors cause resources tobecome reserves or, conversely, cause former reservesto become subeconomic? The principal reasons areshifting consumption patterns, the release or formationof stockpiles, and changing government policies — allthree factors tend to be interrelated.

It is important to bear in mind two constraints uponthe reserve and resource estimates presented here.First, reserve estimates apply only to present economicconditions. Second, supply and demand projections,while useful, are highly speculative beyond the shortterm. A third consideration relates to physical limitationsupon the rate of delivery of a resource — the fact that areserve is present in large quantity by no means guaran-tees that it is or will be producible at a rate sufficient tomeet demand. The creation of a new oil sands plant, forexample, can easily require a decade from conceptionof the project to the first production of synthetic crudeoil, and limitations on capital and manpower availabilitycould force a slower rate of development than mightotherwise be desired. Even a producing deposit is sub-ject to rate-related constraints — crude oil is extractablefrom a reservoir at a rate determined by the viscosity ofthe oil, the characteristics of the reservoir rocks and wellspacing.

2. HYDROCARBON RESOURCES

Hydrocarbons are organic compounds consisting ofcarbon and hydrogen, and these compounds may existas gases, liquids or solids. Crude oil, natural gas andcoal are essentially mixtures of hydrocarbons of varyingdegrees of complexity and containing varying amountsof impurities such as sulphur.

27

Figure 3-6: THE FLOW OF RESOURCES OVER TIME

Known resourcesthat are not now

economic'

RESERVESKnown resourcssthst are currently

economic - nujstfy-

RESOURCESUPPLIES

Source: After Cranstone. Mclntosh and Azis. 1978, p. 2.

A. LIQUID HYDROCARBONS

For the purpose of this discussion the term liquidhydrocarbons includes conventional crude oil, syntheticcrude oil and natural gas liquids. Table 3-1 is a compila-tion of recent estimates of Canadian reserves andresources of liquid hydrocarbons. Figure 3-7 shows theevolution in Canada's reserves position since 1955 forconventional liquid hydrocarbons (that is, including con-ventional crude and natural gas liquids). Our reserves of

conventional crude peaked in 1969 at 1.665 millioncubic metres (about 10.5 billion barrels) and have sincebeen in decline.

Canada's proven reserves of conventional crude oilare strongly concentrated in the Province of Alberta. Ifthese reserves could be produced and delivered tomarkets at a rate equal to domestic demand, they wouldbe sufficient to meet all of Canada's petroleum needs forabout eleven years at the current rate of consumption(about 300,000 cubic metres per day). In fact, this could

28.

THE ENERGY SYSTEM TODAY

never actually take place as there are physical limita-tions which 'dictate a maximum rate of production andthere is no crude oil delivery system in Atlantic Canada.Other conventional oil resources are estimated to be

Table 3-1: CANADIAN LIQUID HYDROCARBONRESERVES AND RESOURCES

Conventional Proved Reservesof Crude Oil and Natural GasLiquids

British ColumbiaAlbertaSaskatchewanManitobaEastern CanadaMainland Territories

TOTAL

Unconventional RecoverableUpgraded Oil Resources1»1

Lloydminister (heavy oil)Cold Lake in situ (oil sands)Athabaska Mining (oil

sands)Athabaska in situ (oil

sands)

TOTAL

Conventional Oil Resources''»Western CanadaMackenzie-BeaufortEastern ArcticEastern Canada (including

offshore areas)Mainland Territories

TOTAL

(» 1 cubic metre = 6.29 barrels.

Volume(millions of cubic

metres)""

321,101

11961

29

1,288

127-3652,384-4,767

4,291

6.356-22,247

13,158-31,670

1,5891,096

604

82679

4,194

<•» Range in estimates results from uncertainty regardingthe recovery factor attainabletechnology.

(c| Includes remaining reserves,and undiscovered potential atlevel (1976 estimate).

Source: Canada, Department ofResources, 1980b; andAssociation, 1980.

using in situ recovery

discovered resourcesthe 50% probability

Energy, Mines andCanadian Petroleum

close to four times the level of reserves and are, onceagain, strongly concentrated in Western and ArcticCanada, notwithstanding recent discoveries on theGrand Banks of Newfoundland.

Canada's largest hydrocarbon resource is found inthe heavy oils and tar sands of Western Canada (mostlyAlberta) — a resource sufficient, theoretically, to meetour requirements at current rates of consumption forclose to 400 years, depending upon how much can berecovered. It is plain, then, that this country need not runshort of conventional or synthetic oil for a very long timeif political barriers can be overcome and if Canada isprepared to develop resources and pay the costs —economic, social and environmental — of that develop-ment. The Committee is of the opinion, however, thatthese costs are untenable and therefore proposes alter-natives which are described in this Report.

Massive development of the oil sands, sufficient tosustain a petroleum-oriented energy system in Canadafor decades to come, would entail very high costsindeed. In 1980 dollars, the estimated cost of the nexttar sands plant has passed $10 billion and the impact onAlberta's economy of establishing a series of suchplants in rapid succession could be devastating. Short-ages in skilled and professional people together withrestrictions in the supply of specialized equipment andmaterials would make it very difficult to construct severalplants simultaneously. These facilities also require waterin large volumes (which becomes contaminated withbitumen and cannot be returned directly to the Athabas-ca River), and release significant quantities of sulphurdioxide to the atmosphere in processing the high-sul-phur bitumen. Some observers have concluded that theoptimal rate of tar sands development would see onenew plant coming into operation every four years. Thusthe Committee views Canada's oil sands as being anessential but by no means dominant contributor todomestic energy supplies in coming decades.

Despite the extensive resources listed in Table 3-1,it is a matter of record that Canada is not self-sufficientin petroleum. Problems relating to oil prices, capitalavailability and technological innovation as well as politi-cal decisions and lagging exploration successes havecontributed to a decline in production in recent yearsand, as indicated in Figure 3-8, this trend is likely tocontinue for some time to come. The lower, shaded areain the illustration indicates future crude oil producibilityfrom known reserves (in 1978) of conventional oil and ofsynthetic oil from the two operating tar sands plants.Actual production is not likely to drop into this regionbecause these reserves are sure to be augmented andbecause present conditions suggest that we will contin-ue to extract crude oil at a rate near Canada's maximumproductive capacity.

29

Figure 3-7: CANADA'S RESERVES OF CONVENTIONAL LIQUID HYDROCARBONS, 1955-1979

TOTALCONVENTIONAL LIQUID

HYDROCARF NS

-1800

-1600

-1400

-1200

1000

oCO

800 R

200

YEAR-END

Note: The break in the curve between 1962 and 1963 reflects a change in methodology of estimating reserves by the CPA.

Source: After Canadian Petroleum Association. 1980.

The 1978 National Energy Board demand forecastsfor petroleum products have also been illustrated inFigure 3-8. The Board is updating its 1978 forecasts ofoil supply and demand but those results were not avail-able at the time of preparation of this Report. Forecastsprepared since 1978 by EMR suggest that futureCanadian demand will fall below the 1978 NEB basecase, and that domestic supply will actually lie betweenthe NEB base and high forecasts. If the EMR projectionsprove nearer the mark, then Canada's petroleum short-fall over the 1980s will be less than that suggested in the1978 NEB report.

The role that price plays in influencing reserves isreflected in Figure 3-9, which illustrates Canada's suc-cess in adding to its reserves of conventional crude oil

since 1963. Gross additions to reserves in any yearminus crude oil production in that year equal net addi-tions to reserves. Since 1969, net additions to reserveshave been negative — that is, Canada's reserves ofconventional crude oil have fallen throughout the period.This decline was sharpest in 1973-1974 when reservesfell at the rate of about 0.5 billion barrels per year. Withrising oil prices, however, drilling was encouraged andmore producing wells were brought in. Drilling activityreached its highest level ever in Canada in 1980 andgross reserve additions very nearly offset domestic pro-duction. Nonetheless, the Western Canada SedimentaryBasin is a mature oil-producing region and Canada mustlook to its frontier regions or to the oil sands for majorproduction increases in the future.

30

THE ENERGY SYSTEM TODAY

Frequently Used Terms in the Petroleum Industry

The petroleum industry uses a specializedvocabulary and we have drawn together heresome of the more commonly used terms. Thesedefinitions are not always consistent from sourceto source and in some instances have changedwith time.FOSSIL FUEL—Combustible geologic deposits of

carbon in organic form and of biological origin.These deposits include crude oil, natural gas, oilshales, oil sands and coal.

PETROLEUM—Often defined as naturally-occur-ring liquid hydrocarbons. Sometimes the defini-tion is extended to include refined products inthe liquid state; occasionally it is used to furtherencompass natural gas, bitumen and kerogen(a solid hydrocarbon found in oil shale).

(CONVENTIONAL) CRUDE OIL—A mixturemainly of pentanes and heavier hydrocarbonsrecoverable at a well from an undergroundreservoir, and which is liquid at the conditionsunder which its volume is measured orestimated.

SYNTHETIC CRUDE OIL—A mixture mainly ofpentanes and heavier hydrocarbons that isderived from crude bitumen and which is liquidat the conditions under which its volume ismeasured or estimated. The output from theAthabasca oil sands comprises synthetic crudeoil production in Canada today.

CONDENSATE—A mixture mainly of pentanesand heavier hydrocarbons recoverable at a wellfrom an underground reservoir, and which isgaseous in its virgin reservoir state but is liquidat the conditions under which its volume ismeasured or estimated. Condensate is oftenunderstood to be included in "crude oil" and wefollow that usage in this Report.

PENTANES PLUS—A mixture mainly of pen-tanes and heavier hydrocarbons which isobtained from the processing of raw gas, con-densate or crude oil.

As used in this Report, the term OIL includesconventional and synthetic crude, condensate andpentanes plus. If we wish to exclude syntheticcrude from this grouping, we denote the remainingthree as CONVENTIONAL OIL.

CRUDE BITUMEN—A naturally-occurring mix-ture, mainly of hydrocarbons heavier than pen-tane, that in its natural highly-viscous state isnot recoverable at a commercial rate through awell.

TAR SANDS—Sands impregnated with a heavycrude oil, tar-like in consistency, that is tooviscous to permit recovery by natural flowageinto wells.

HEAVY OIL DEPOSITS—Oil deposits transitionalin character between the heavier tar sand typeof bitumen deposit and conventional crude oil.The crude is highly viscous and either does notflow or flows at very low rates under normalconditions.

Tar sands and heavy oil deposits are usually joint-ly referred to as OIL SANDS, a terminology whichwe follow.

NATURAL GAS LIQUIDS (NGL)—A productintermediate between natural gas and crude oil,and which constitutes a family of hydrocarbonsextracted as liquids during the production ofnatural gas. NGL includes ethane, propane,butanes or pentanes plus, or a combinationthereof.

LIQUEFIED PETROLEUM GASES (LPG)—A sub-group of the natural gas liquids, consisting prin-cipally of a mixture of propane and butanes,which are gaseous at atmospheric pressure butliquid at slightly higher pressures. These arefamiliar as "bottled gas".

The commodities mentioned thus far —crude oil, synthetic crude oil, condensate, pen-tanes plus, propane, butanes and ethane — com-prise the LIQUID HYDROCARBONS.

ASSOCIATED GAS—Gas in a free state in areservoir and found in association with crude oil,under initial reservoir conditions.

NON-ASSOCIATED GAS—Gas in a free state ina reservoir but not found in association withcrude oil, under initial reservoir conditions.

SOLUTION GAS—Gas that is dissolved in crudeoil under reservoir conditions and which evolvesas a result of pressure and temperaturechanges.

RA.W GAS—Natural gas in its natural state, exist-ing in a field or as produced from a field andprior to processing.

MARKETABLE NATURAL GAS—Raw gas fromwhich certain compounds have been removedor partially removed by processing. Marketablegas is often referred to as "pipeline gas" or"sales gas", and is primarily composed ofmethane.

31

Figure 3-8: RANGE OF OIL PRODUCIBILITY AND DEMAND FORECASTS, 1978 NATIONAL ENERGYBOARD REPORT

3200

78 79 80 SI 82 83 84 85 87 88 90 91 92 93 94 95

YEAR

The lower, shaded area of the graph represents reasonably assured future production from known conventionalreserves and from the two operating plants in the tar sands. The upper supply curves are producibility forecastsbased on optimistic, base case and pessimistic assumptions for future additions to conventional reserves and tononconventional production capacity. Similarly, the demand curves represent high, low and base caseprojections.

Source: After Canada, National Energy Board, 1978.

B. NATURAL GAS

As shown in Table 3-2, Canada's natural gasreserves and resources are extensive. Figure 3-10, whichdisplays Canada's reserves of marketable natural gassince 1955, indicates an almost continual expansion inour reserves position. As is the case with crude oil, theresource is strongly concentrated in Western Canada,particularly in the Province of Alberta. If all knownnatural gas reserves in Canada could be produced anddelivered to the Canadian market at a rate sufficient tomeet domestic requirements, the supply would last forsome fifty years at current rates of consumption (about45 billion cubic metres per year), and additionalresources could add about 180 years to this total. Ofcourse, such numbers must be used cautiously, bearing

in mind that Canada will continue to export gas; thatnew domestic markets will be established in Quebec andthe Maritime Provinces; and that new reserves will bediscovered. Nevertheless, it is apparent that in the con-text of Canadian energy demand, the national resourcebase for natural gas is substantial indeed.

Canada is in a position to make a major substitutionof natural gas for crude oil in meeting its domesticenergy requirements and in backing imported crude outof the Eastern Canadian market. Extending the distribu-tion system for natural gas into Eastern Quebec and theMaritimes in Eastern Canada a* id onto Vancouver Islandin Western Canada are matters of high priority. Onlyafter sufficient reserves have been set aside to supply atruly national distribution system should gas be alloca-ted to the export market.

32

THE ENERGY SYSTEM TODAY

Figure 3-9: GROSS AND NET ADDITIONS TO CANADA'S CONVENTIONAL CRUDE OIL RESERVES,1963-1979

1 5 0 0 -

1000-

5 0 0 -

-500 -J (00 i g M

Source: After Canadian Petroleum Association, 1980.

Rgure 3-10: CANADA'S RESERVES OF MARKETABLE NATURAL GAS, 1955-1979

100-

9 0 -

8 0 -

3 60-IL

«50-S^40-

30-

20-

10-

MARKETABLE NATURAL GAS

-2800

-2600

-2400

-2200

—2000 23

-1800 s

-1600 |

-1400 £

-1200 |

-1000 =j

-800

-600

-400

-200

55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 7YEAR-END

Note: The break in the curve between 1963 and 1964 reflects a change in methodology of estimating reserves by the CPA.

Source: After Canadian Petroleum Association, 1980.

33

Table 3-2: CANADIAN NATURAL GASRESERVES AND RESOURCES

Volume(billions of

cubic metres)""

Known Natural Gas ReservesBritish Columbia 187.0Alberta 1,640.2Saskatchewan 22.7Eastern Canada 8.5Mackenzie Delta-Beaufort Sea .... 260.6Mainland Territories 8.5

TOTAL 2.127.5

Natural Gas Resources'1»Western Canada 2,748Eastern Canada Mainland and

Offshore 1,235Mackenzie Delta-Beaufort Sea .... 1,700Eastern Arctic 1,445Mainland Territories 275

TOTAL 7,403

<a> 1 cubic metre = 35.3 cubic feet.lbl Includes remaining reserves, discovered resources

and undiscovered potential at the 50% probabilitylevel (1976 estimate).

Source: Canada, Department of Energy, Mines andResources, 1980b.

Canada is fortunate to possess abundant coalresources of all ranks except for anthracite. Economical-ly significant deposits occur in every province exceptNewfoundland, Prince Edward Island and Quebec, andare heavily concentrated in Alberta and BritishColumbia. Table 3-3 shows the most recent estimate oftotal coal resources in Canada.

Table 3-3: ESTIMATES OF COAL RESOURCESAND RESERVES IN CANADA, 1978

Unit: Millions of metric tons.

Coal Rank

ligniticsub-

bituminousbituminous

Resources ofImmediateInterest*"

(1977 MineableCoal)(t"

17,209 (3,207)

132,000 (7,328)98,787 (5,556)

Resources ofFuture Interest

27,586

198,000

(a> Includes mineable coal.<b| Mineable coal is that part of the measured and

indicated resources of immediate interest within acoal deposit that can be considered for mining usingcurrent technology, and applying broad economicjudgement only to the mining method.

«=> Not determined.

Source: After Bielenstein etal, 1979, p. 15, 23.

C. COAL

Coals are solid hydrocarbons which have formedthrough the action of heat and pressure on buriedvegetative material over geological time. They are classi-fied by rank which is determined by the degree ofalteration of the original organic material. The fourclasses of coal, in decreasing order of rank, are anthra-cite, bituminous, subbituminous and lignite. In general,decreasing rank is characterized by lower carbon con-tent, lower heat value and increasing softness.

Coal quality refers to those characteristics whichaffect the potential use of a coal. Quality is determinedprimarily by the nature and amount of organic material,noncombustible (mineral) material and moisture. Thesecharacteristics govern the use to which the coal can beput, whether for power generation, metallurgical coke orchemical feedstock.

These resources include those of "immediate inter-est" and discovered resources of "future interest". Thatportion of the coal resource which can be considered"mineable" — that is, the coal reserve in Canada — isshown in the table in brackets. Not all of this "mineablecoal" can be recovered, however. Generally, only about65-85% of the coal is actually recovered in undergroundmining operations, with somewhat more being recover-able in strip-mining situations. Canadian coal resourcesare sufficient to meet domestic Canadian demand forcenturies, even allowing for reasonable increases inproduction.

In 1979 Canada had thirteen principal operatorsproducing coal from 21 coal mines. Between them theyproduced an estimated 33.2 million tonnes of coal,mostly bituminous grades. Table 3-4 shows that coal

34

THE ENERGY SYSTEM TODAY

production in Canada has more than doubled since1970, with the level of coal exports increasing to roughlymatch imports (thermal and metallurgical coal has tradi-tionally been imported into Ontario from the EasternUnited States).

Table 3-4: COAL PRODUCTION, IMPORTS.EXPORTS AND CONSUMPTION INCANADA. 1968-1978

Unit: Millions of metric tons.

DomesticProduction Imports Exports Consumption

1968 10.0 15.51969 9.7 15.71970 15.1 17.11971 16.7 16.51972 18.8 17.51973 20.5 14.81974 21.3 12.41975 25.3 15.31976 25.5 14.61977 28.7 15.41978 30.5 14.1

Source: After Aylesworth and Weyland, 1980, p. 2.

1.31.24.07.07.7

10.910.811.711.812.414.0

24.824.026.825.625.824.924.826.128.230.931.7

3. HYDRAULIC RESOURCES

Installed hydro-electric generating capacity inCanada has increased dramatically as the 20th centuryhas progressed, although the proportion of total gener-ating capacity represented by hydraulic sources hasdropped steadily from a high of over 90% in the 1940sand 50s to a low of 57% in 1979. Canada's installedgenerating capacity by type since 1920 is given in Table3-5. Although hydro-electric generating capacity is fore-cast to increase by more than 15,000 MW by 1991, itnevertheless will remain at about the same proportion ofthe total electrical energy mix in the early 1990s.

Canada is blessed with abundant hydro resourcesby comparison with almost any other country. Neverthe-less, the great majority of undeveloped generating sitesare uneconomic at present; many of these are small orlow-head. The question of how many of these siteseventually become economically exploitable and at whatrate they are developed depends upon a number ofimponderables, among which are technologicaladvances in hydraulic power generation, the changingeconomics of electricity in the national energy mix, andtechnical and political changes relating to nuclear fis-sion. A further constraint lies in the environmentalimpact of extensive hydro development. The impact of

Table 3-5: INSTALLED ELECTRICAL GENERAT-

Year

192019301940.....1950195519601965197019751979.....

Source:

ING CAPACITY IN1979

CANADA, 1920-

Unit: Electrical megawatts.

Conven-tional

Thermal Nuclear

300 —400 —500 —900 —

2.100 —4.392 —7.557 20

14.287 24021,404 2.66627.216 5.866

Canada. Department ofResources, 1980a, p. 70.

Hydro

1,7004,3006,2008,900

12.60018,65721.77128.29837,28243.990

Energy,

Total

2.0004,7006,7009.800

14.70023,04929,34842,82561,35277,072

«lines and

Table 3-6: CANADA'S HYDRO-ELECTRICPOWER POTENTIAL IN 1980Unit: Electrical megawatts.

Undeveloped Power Potential

Remain-Actual ing

Operation Theore-and under ticalConstrue- Hydro

tion Potential

Remain- Economi-ing cally

Techni- & Techni-cally cally

Develop- Develop-able able

Potential Potential

Nfld. & Lab.. 6,535P.E.I —N.S 360N.B 900Que 25.750Ont 7.138Man 4.796Sask 567Alta 718B.C. 12,134Yukon 68N.W.T. 47

CANADA 59.013

7.000 6,272 • 4.776

160620

42,1607,7707,0232.395

18.80029,40011.00014,900

100556

30.7506.1524.9451.71-1

11,44025.82710.4406.000

50460

18,8382,0724,9451.1614,35717.5755,0434.163

141.228 104,193 63,440

Notes: (a| Projects in the planning stage are included inremaining undeveloped potential.

|b| Remaining economically and technicallydevelopable potentials are installable capaci-ty in megawatts.

'c) Pumped storage and tida! power are notincluded.

Source: Canada, Department of Energy, Minesand Resources, 1980c.

35

the construction of many new hydro schemes uponinland fisheries, recreational and other land use andlocal climate will require careful study in the years tocome.

Current estimates suggest that a further 104,000megawatts of hydraulic power is technically feasible todevelop, more than double the capacity exploited today.Of this amount, perhaps 63,000 megawatts is economi-cally developable. The present distribution of existingand potential hydro-electric power development inCanada is summarized in Table 3-6. It is apparent thatthe ultimate potential of this energy source is quitelimited by comparison to many other energy forms, andthat Canada's hydraulic resources will have been largelyexploited by the middle of the 21st century.

4. URANIUM RESOURCES

Canada has extensive uranium resources. Uraniummining is underway in Ontario and Saskatchewan, andsignificant additional deposits are known in these Prov-inces and in Newfoundland, New Brunswick, Quebec,British Columbia and the Northwest and Yukon Territo-ries. Table 3-7 gives the most recent published estimate

Table 3-7: CANADA'S MINEABLE URANIUMRESOURCES IN 1979

Unit: Thousands of metric tons of ele-mental uranium.

Uranium Contained inMineable Ore»'

Mineable at Meas-Uranium Prices of ured

Up to $130/kg ofUranium"» 73$130 to $200/kg ofUranium0» 4

TOTAL 77

Indi-cated Inferred

157

25

238

90

182 328

"' The uranium recoverable from the ore will be some-what less because of milling losses.

«" The dollar figures refer to the market price of aquantity of uranium concentrate containing 1 kilo-gram of elemental uranium.

Source: Canada, Department of Energy, Mines andResources, 1980g, p. S.

of Canada's mineable uranium resources. Discoveriessince 1979 have added significantly to these totals andrising prices will result in the conversion of more uraniumresources to reserves. Rgure 3-11 shows that Canada'suranium production capability far exceeds forecastdomestic requirements, explaining our major exportposition in this energy commodity.

Figure 3-11: PROJECTED CANADIAN URANIUMPRODUCTION CAPABILITY COM-PARED WITH ESTIMATEDANNUAL URANIUM REQUIRE-MENTS

16000,

1980 1982 1984 1986 1988 1990

Source: Canada, Department of Energy, Mines and Resources,1980g, p. 13.

36

Energy Flows in Canada

1. ENERGY SUPPLY, DEMAND AND TRADE

Canada's energy system has undergone rapidexpansion since World War II and in the process wehave progressed from being a net importer to a netexporter of energy. The production of primary energyincreased rapidly until 1973, a year in which we sold tothe United States the equivalent of over 60% of ourpetroleum production, 40% of our marketable naturalgas output, and 6.4% of our net electrical generation. Infact, Canada exported more than one-third of its totalenergy production to the United States in 1973 and wasa larger supplier of oil to the U.S. than was the MiddleEast. Thereafter, the production of primary energy inCanada fell until 1977. The principal cause of this

decline was a reduction in crude oil output as Canadapursued a policy of phasing out the export of lightcrudes. Most recently, an upturn in Western Canadianconventional crude production (which is transitory) hashelped to boost Canada's production of primary energy.

Canada became a net exporter of energy in thelatter 1960s and today exports of energy in the form ofnatural gas and electricity exceed imports of energy inthe form of oil and coal. This trade position has beenvery much to Canada's advantage as Figure 3-12 indi-cates. Canada has shown a net income from its energytrade in every year since the late 1960s and in 1979 thatincome amounted to nearly $4 billion. With imports ofcrude oil expected to grow until at least the mid-1980s,however, one can anticipate that this surplus will shrink.

Figure 3-12: CANADA'S DOLLAR TRADE IN ENERGY COMMODITIES, 1970-1979

4000

3500

3000

Total NetExports

-1500

—2000'1970 1971 1972 1973 1974 1975 1976

Source. After Canada, Department of Energy. Mines and Resources, 1980e. p. 8.

1977 1978 1979

37

Figure 3-13: CANADA'S PRODUCTION AND CONSUMPTION OF PETROLEUM, 1955-1979

2—

1 . 5 -

LIQUID HYDROCARBON PRODUCTION

SUmë

COI0 . 5 -

APPARENT CONSUMPTIONOF CRUDE OIL AND PRODUCTS

340

-320

-300

280

-260

-240 2

-220 ÜCO

-200 je

-180 =

-160 |

-140 oCO

-120 §

55 56 57 53 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79YEAR

Source: After Canadian Petroleum Association, 1980.

-100

-80

-60

-40

-20

0

The trends in Canada's domestic supply anddemand of oil and gas are displayed in Figures 3-13 and3-14. The first illustration shows liquid hydrocarbon pro-duction (crude oil and gas liquids) plotted against Cana-da's apparent consumption of crude oil and products. Inthe early 1970s we were net exporters of oil, with salesto the United States peaking in 1973. After a modestupturn in production in 1979, domestic oil output slippedin 1980 and Canada faces a widening gap betweensupply and demand as the 1980s progress.

In contrast, Figure 3-14 shows how Canada'soutput of natural gas has outpaced domestic demand,sustaining our substantial sales of gas in the U.S.market. This excess productive capacity in natural gashas been the principal factor behind Canada's positivetrade balance in energy commodities throughout the1970s.

2. THE CONVENTIONAL ENERGY MIX

As well as appreciating the growth in Canada'senergy system, it is also important to follow the evolution

in the energy mix — the relative contributions that havebeen made by each primary energy form. That evolutionis depicted in Figure 3-15 which shows the contributorsto Canada's primary er&rgy supply since 1871.

First fuel wood and then coal dominated our energysystem. Crude oil and natural gas have risen in tandemsince World War II to displace coal, with oil establishedas our most important energy commodity over the lastquarter-century.

In a time span of (ess than two decades, during the1940s and 1950s, oil's share in Canada's energy mixexpanded from approximately 20% to more than 50%.That share was subsequently maintained for 15 yearsbut now has begun to contract. We expect oil to contin-ue to lose ground to the other major components ofFigure 3-15, namely natural gas, primary electricity andcoal.

While Figure 3-15 suggests that substantialchanges can be brought about in an energy systemrather quickly, that interpretation is not entirely correct.Oil penetrated Canada's energy mix at a time when our

38

THE ENERGY SYSTEM TODAY

Figure 3-14: CANADA'S PRODUCTION AND CONSUMPTION OF NATURAL GAS, 1955-1979

220

•200

180

-160

"140

"120

•100

"80

-60

-40

"20

7-

i-5-

i 3"

2 -

MARKETED GAS PRODUCTIONA

AA

A

A JWLSUESGAS

55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79YEAH

Source: After Canadian Petroleum Association, 1980.

energy system was much smaller and less complex.Today, the inertia to change is far greater because thesystem is large and entrenched. Oil also found readyacceptance because it possessed obvious advantagesover other energy forms. Now we are being forced toconsider some options which are not as appealing. Onecan safely predict that it will prove much more difficult toget off oil than it was to get on it.

3. ENERGY UFEL.NES

Energy moves across Canada in an extensivesystem of pipelines and transmission lines, supplement-ed in places by truck, rail, water and air transport. Theseenergy distribution systems are so fundamental to theeconomy and so important to the well-being of Canadi-ans that they may be thought of as energy "lifelines".We tend to appreciate their significance, however, onlywhen they are disrupted. None of these systems is trulynationwide in extent, and lack of service by pipelines or

the electrical grid to a region may represent both aproblem in conventional energy supply and an opportu-nity for the penetration of alternative energy forms.

Hydro-electricity and nuclear-electricity togethersatisfy about 13% of Canada's primary energy require-ments. Hydro and nuclear generating stations com-prised 65% of Canada's installed electrical generatingcapacity at the end of 1979, with the remaining capacitymade up of coal-, oil- and gas-fired stations. The use ofelectricity is spread over all sectors of the economy andmost populated regions of the country. Such widespreaduse has been made possible by the construction of acomplex transmission system. :

Over 90% of the electricity used in Canada isgenerated and distributed by provincially-owned publicutilities. In many locations interprovincial transmissionlines have been built to service areas of adjacent prov-inces and to spread the benefits of reliability inherent inlarger electrical systems. In all there are twenty-two

39

Figure 3-15: THE PRIMARY ENERGY MIX IN CANADA SINCE 1871

90%

Crude Oil and Gas Liquids

1 70 1880 1890 1900

Source: After Steward, 1978.

1950

'Wafer Power'

T 9 6 0 OTÖ Ï980

separate provincial interconnections in excess of 100kV, with two more proposed or under construction.Canada's main transmission lines are illustrated in Figure3-16.

In addition to the interprovincial links, there aremore than 100 transmission lines between Canada andthe United States, which provide over 8,000 megawattsin power transfer capability. About one-half of the inter-national transfer lines connect Ontario to utilities in NewYork and Michigan. The remainder of the lines link NewBrunswick with Maine, Quebec with New York and Ver-mont, Manitoba with North Dakota and Minnesota, andBritish Columbia with Washington. Several new highvoltage lines (from Ontario to New York and fromManitoba to the North-Central States) are in the plan-ning, licensing or construction stages. These new lineswill add a further 3 ,240 megawatts of transfer capability.

At the present time, the largest addition beingmade to Canada's electrical network is the extensivesystem for transmitting power from the James BayProject to southern markets. This system involves fiveparallel 735 kilovolt AC lines, the first of which wascompleted in September 1979. The remaining lines are

due to be finished by October 1984. A single 500 kV ACline between the Fraser Valley in B.C. and Calgary is theother major transmission line under construction today.

Canada has an oil pipeline system for movingdomestically-produced oil to refining centres from BritishColumbia to Quebec, and for bringing imported oil intoMontreal via the United States. Neither Vancouver Islandnor any of the country east of Montreal is connected tothis distribution network. Figure 3-17 shows existing andproposed pipelines.

The Trans Mountain Pipeline consists of 1,156 kmof pipeline between Edmonton and Vancouver, withconnections to the Westridge Marine Terminal (in Van-couver) and to the American border where it joinspipelines serving four refineries in Washington State.This pipeline system has a pumping capacity of 410thousand barrels per day (65,180 nrVd) and a storagecapacity of 4.35 million barrels (692,000 m3).

The major cross-Canada pipeline delivering westernoil to eastern refineries and consumers is the Interprovin-cial Pipe Line. This system runs 3,700 km across theCanadian prairies, through the United States south ofLakes Huron and Michigan to Sarnia, Toronto and Mon-

40

LEGENDTRANSMISSION UNES

s Existing Construction Ü 3

Under400kV— 400kV and over

GENERATING STATIONS

Figure 3-16: THE MAIN ELECTRICAL TRANSMISSION LINES

AND GENERATING STATIONS IN CANADA

Source: Canada, Department of Energy, Mines and Resources, 1980a.

ALASKA(U.SA),

LEGENDEXISTING OIL LINES

OIL LINES PROPOSED

K3C

YUKONNORMAN 1WELLS t

san1IHTERPROVIHCIAL

WE LINE (NW)

NORTHWEST

TERRITORIES

BRITISHCOLUMBIA

TRANS MOUlfaw

.BERTAiWs

SASK.PKUNEI

JVER

MY LTD.

CALGARY»

DMOrlTON MANITOBA QUEBECMTERPROVINCIAL

PIPE UNE LT

JWINN

ONTARIO>N.B.

Rgure 3-17:

Source: Canada

CANADA'S OIL PIPELINE

DISTRIBUTION SYSTEM

National Energy Board, 1980.

U.S.A.C H I C A O T V § i ^

LEGENDEXISTING GAS LINES — _ « =GAS LINES PROPOSED OR R 8UNDER CONSTRUCTIONLPG LINES

NORTHWEST TERRITORIE

BRITISH •••COLUMBIA

/ ONTARIO

TRANSCANADAPIPELINES SYSTEM

Figure 3-18: CANADA'S GAS PIPELINE

DISTRIBUTION SYSTEM

Source: Canada, National Energy Board, 1980.

treat, with a lateral line to Buffalo. It has a capacity topump 1,528 thousand barrels/day (243,000 nvVd) andfor the last few years has been running at or nearcapacity. The storage capacity of this large pipelinesystem is about 16.25 million barrels (2.6 million m3).

The third pipeline system serving Canadian refiner-ies is the Portland-Montreal Pipe Line. This 380 kmpipeline has a design capacity of 550 thousand barrels/day (87,440 m3/d) but since mid-1976 has been operat-ing very much below this level since Montreal beganreceiving roughly 300 thousand barrels/day (47,700m3/d) from Western Canada through the Interprovincialextension.

A system of gas pipelines delivers Western Canadi-an gas to markets across the country from Vancouver toQuebec, but the Maritime Provinces and VancouverIsland have yet to be connected to this distributionsystem. The Westcoast Transmission Company servesBritish Columbia and western U.S. markets with gasfrom British Columbia, Alberta, the Yukon and North-west Territories. This system delivered a total of 146billion cubic feet (4.13 billion cubic metres) to BritishColumbia markets in 1979. In addition the system islicensed to export 869 million cubic feet per day (24.59million cubic metres) to the United States.

In Alberta, the Alberta Gas Trunk Line operates atotal of 10,836 kilometres of pipeline to collect gas fromthe many small wells scattered throughout the Province.This system feeds into the large-diameter system oper-ated by TransCanada PipeLines Limited. TransCanada'spipeline extends from Alberta to Quebec with laterallines stretching to the international border at Emerson,Manitoba; Sault Ste. Marie, Samia and Niagara Falls,Ontario; and Philipsburg, Quebec. The total systemcomprises 9,344 km of pipeline and transports an aver-age of 85 million cubic metres of natural gas daily toalmost two million Canadian customers.

Recently a license was granted to extend the Trans-Canada system beyond Montreal to Quebec City. In theNational Energy Program the Federal Governmentannounced its intention to ensure that the system isextended still further to serve the Maritime Provinces by1983. The extension will be designed to allow for gasflow in either direction so that it can be delivered fromthe Maritirnes should commercial discoveries be madeoff the East Coast.

In the future, new pipelines will be required toconnect frontier and offshore gas to markets. To accom-modate this need several proposals have been putbefore the National Energy Board. The "Dempster Lat-eral" would be used to transport Mackenzie Delta gas toCanadian markets in conjunction with the larger AlaskaHighway Natural Gas Pipeline System, which hasalready been given Canadian approval to carry U.S. gasto American markets.

The Arctic Pilot Project seeks permission to deliverArctic gas to southern markets in liquified form, and thePolar Gas Project is designed to bring both MackenzieDelta and Arctic gas to sourthern markets via pipeline.The recent gas find off Sable Island could be connectedto the mainland by pipeline, but no proposal for such aline has yet been made. This must await better definitionof the gas reserves available.

Existing and proposed natural gas distribution sys-tems are illustrated in Figure 3-18. Proposed distributionsystems include those presently in the regulatoryapproval process.

4 . REGIONAL CONSIDERATIONS

Not yet revealed in our discussion are the regionalenergy imbalances which exist in this country. Figure3-19 brings this situation into focus, displaying the pro-duction of primary energy in Canada by region againstthe net energy demand within that region, for the year1978. Saskatchewan, for example, had a primaryenergy production that year of 517 petajoules and a netenergy demand of 306 petajoules. Even allowing forconversion losses, Saskatchewan produced from withinits own borders substantially more energy than itrequired for its needs (although not necessarily in theappropriate form). Consequently Saskatchwan was aregion of Canada with surplus energy which could besold in other parts of the country and abroad.

Now consider all the regions of Canada representedin Figure 3-19. Only in the western part of the country—British Columbia, Alberta and Saskatchewan—does pri-mary energy production exceed net energy demand.Alberta dominates as an energy supplier; Ontario andQuebec as energy consumers. Thus the prevailing flowof energy in Canada's system is from west to east.Based upon 1978 data, Alberta alone produced 71 % ofCanada's energy while consuming only 12%. In con-trast, Ontario accounted for less than 4 % of Canada'sprimary energy production but 37% of its net energydemand. It is not difficult to understand why the twoProvinces have had opposing views on energy pricing.Neither is it hard to understand why different regions ofthe country view opportunities in the alternative energyfield in such varying ways.

Moreover, this regional energy imbalance is greaterthan that indicated in the statistics of primary energyproduction alone — Western Canada contains twoenergy resources, in addition to conventional crude oiland natural gas, which are presently being exploited atonly a fraction of their potential, namely coal and the oilsands. This region, cf Canada will continue to dominatethe supply side of the domestic energy scene for manyyears to come.

44

THE ENERGY SYSTEM TODAY

Figure 3-19: PRIMARY ENERGY PRODUCTION AND NET ENERGY CONSUMPTION BY REGION IN CANADADURING 1978

7728

ATLANTICCANADA

Notes: <•• Data for Newfoundland, New Brunswick, Nova Scotia and Prince Edward Island are aggregated as Atlantic Canada forreasons of confidentiality in industry reporting. Energy statistics for the Yukon and Northwest Territories are alsoaggregated. Otherwise the regional breakdown is by province.

"» Primary energy production refers to the energy extracted from a given region of Canada. We refer here to the production ofcrude oil (both conventional and synthetic), natural gas, natural gas liquids, coal, hydro-electricity and nuclear-electricity.Net energy consumption refers to energy actually consumed in a given region of Canada.

Source: After Canada, Statistics Canada, 1980.

The simple statement that Canada still satisfiesabout half of its energy requirements with liquid hydro-carbons (crude oil and natural gas liquids) also hidessome startling regional variations. These variations arehighlighted in Table 3-8 which gives the degree to whichthe regions of the country depend upon the variousforms of conventional energy. Looking at Atlantic andNorthern Canada's overwhelming dependence upon oil,it is not surprising that these regions of Canada show

some of the strongest interest in alternative energy andoil substitution.

When one further considers that Canada's nationaldistribution systems for crude oil and natural gas do notyet extend into the Maritimes, concern regarding theregion's vulnerability to events abroad in the oil sector isquite understandable. With the potential to exploit alter-native energy forms also varying substantially fromregion to region, it is clear that an alternative energy

45

Table 3-8: PERCENTAGE CONTRIBUTIONS OF THE VARIOUS ENERGY FORMS TOENERGY CONSUMPTION IN CANADA BY REGION DURING 1978

Atlantic CanadaQuebecOntarioManitobaSaskatchewanAlbertaBritish ColumbiaYukon & NWT. . ..

CANADA

Crude Oil.Productsand LPG

8 1 . 1 %68.150.650.350.540.555.084.3

56.5%

Natural Gas

0.0%6.1

27.429.738.650.823.7

1.8

2 3 . 1 %

Electricity131

15.0%24.414.618.110.38.3

20.613.9

16.8%

NET DOMESTIC

Coal and CoalProducts

3.9%1.47.51.90.60.30.60.0

3.6%lb'

(3> Includes hydro-electricity, nuclear-electricity and electricity generated from burning fossil fuels (with coal accounting forroughly two-thirds of non-nuclear thermal-electric generation in Canada).

"» This low value for coal's contribution at the level of net domestic consumption reflects the fact that about two-thirds ofCanada's coal requirement is for thermal-electric generation.

Source: Canada, Statistics Canada, 1980.

strategy will have to be more highly tailored to variousparts of the country than has been our conventionalenergy policy. It also follows that the needs of suchareas as Atlantic and Northern Canada have a morepressing claim on our attention.

5. ALTERNATIVE ENERGY USE IN CANADA TODAY

There are only two renewable energy sources in usein Canada today in sufficient quantity to appear innational energy use statistics. The first is hydro-electrici-ty, which accounts for a little more than 10% of Cana-da's primary energy needs. We have not dealt withconventional hydro-electricity in any detail since it isalready in widespread use today and therefore liesbeyond our terms of reference. It is mentioned here,however, to remind the reader that Canadians alreadyderive a significant part of their energy supply from thisrenewable source. The second form of renewableenergy which is widely used today is biomass. The directcombustion of wood wastes such as bark and sawdustfor process heat and steam in the forest industryaccounts for over 3% of Canada's primary energy con-sumption. It has been suggested that this figure coulddouble over the next few years simply by makingincreased use of waste wood within the forest productsindustry.

It is estimated that there are now approximately100,000 wood stoves being purchased and installedannually in Canada, although the total number of woodstoves is not known with any accuracy. Many consum-ers heat their homes with wood cut from small, individu-

ally-owned woodlots and, as no commercial transactiontakes place in obtaining this fuel, it is difficult to collectaccurate statistics on the use of wood for home heating.The firewood that is sold commercially does not give agood indication of the contribution wood does makebecause much of it is burned in fireplaces for aestheticreasons, contributing little to home heating. An EMRestimate of the total use of biomass in Canada in 1980,taking note of the difficulties outlined above, was 3.5%,and the Department believes that biomass could con-tribute as much as 10% of Canada's primary energysupply by the turn of the century.

There is a third form of renewable energy which isbeing used more by luck than by design in this country,and that is passive solar heating. South-facing windowscollect solar radiation and the energy trapped in thisfashion contributes to a building's daytime heat require-ments. Anyone sitting near a large, south-facing windowon a clear winter day will be familiar with this phenome-non. Of course, at night the same window is responsiblefor a certain amount of heat loss. In terms of netcontribution however, it is estimated that 1.5% of Cana-da's primary energy consumption in 1980 was in theform of passive solar heat. As is the case with domesticuse of wood this is only a rough estimate, there being nosimple way of obtaining precise data.

In total then, renewable energy sources suppliedsomething more than 15% of Canada's primary energyneeds in 1980, if one includes hydro-electricity. Thecontrib'Jtion from biomass and solar alone totalled per-haps 5%.

46

An Evolutionin Energy Outlook

T he 1973 EMR Report, An Energy Policy for Canada.noted that energy policies were "complex, diverse

and incapable of simple formulation." These policieshave also been highly changeable, making a brief detail-ing of their history difficult. Nonetheless such a descrip-tion is presented here, in an attempt to put the Commit-tee's study into an historical context.

Generally speaking, energy policy is formulated tomeet a number of broad national aspirations. Theseobjectives, as perceived in 1973 before the OPEC priceincreases, were related totally to energy supply con-siderations and can be stated as follows: ensuring ade-quate supplies of energy at competitive prices; safe-guarding national security; encouraging energy resourcedevelopment; exporting surplus energy supplies underterms that benefit the nation; acquiring energy suppliesfrom abroad when they are more economic than domes-tic sources; and, in general, aligning energy policyobjectives with other national goals such as Canadiancontrol of its energy industries and protection of theenvironment.

The 1973 review was optimistic and the generalphilosophy behind it maintained that energy use andeconomic growth were closely linked — the fact thatCanada's demand for energy would consequently con-tinue to increase was accepted as an inescapableconsequence of our continued prosperity. Furthermore,the potential of the oil sands and frontier oil and gasindicated we could indeed have abundant, reasonably-priced energy to maintain a high rate of economicgrowth.

In 1976 the report An Energy Strategy for Canadashowed a marked change in EMR's philosophy. Thisreport was written during what was described as anenergy crisis and is thus imbued with a pessimism whichwas not evident in 1973. Our proven reserves of oil andlow-cost gas had begun to decline while demand con-tinued to increase. Our exports of oil were declining butimports were increasing and Canada was faced withrising import compensation payments. Drilling results inCanada's frontier regions were disappointing andextracting oil from the tar sands was proving to be moreexpensive than previously anticipated. In light of such

difficulties, the Government began to look seriously atthe need to reduce the rate at which our demand forenergy was growing. At the same time, policies werebeing sought to reduce our dependence on imported oilby switching to other energy forms available domestical-ly in significant quantities. The expression "energy self-reliance" was introduced by the Government in 1976 toindicate its approach to improving the nation's energysituation. The notion that low-cost energy was essentialfor Canadians to maintain their standard of living wasreplaced by the realization that although we have manyenergy supply options, none of them will supply cheapenergy.

The 1976 report also outlined a number of policiesdesigned to meet the stated objectives. These measuresincluded moving domestic oil prices towards internation-al levels; reducing the rate of growth in energy demandto less than 3.5% annually through energy conservationprograms; increasing exploration and development infrontier areas of Canada (with Petro-Canada subse-quently to aid in this task); promoting interfuel substitu-tion to reduce the share of our energy needs satisfied byoil; building new gas and oil pipelines; and increasingresearch and development in the energy sector. Fromour point of view, this latter point :3 particularly impor-tant because it marked the first time that funding forconservation and renewable energy research and de-velopment received special mention. The subject offunding for energy research and development is impor-tant since it is through such funding that implementationof the options chosen in a policy statement are madepossible.

The Canadian effort in energy research, develop-ment and demonstration (RD&D) at the federal levelwhich should have helped to achieve some of the aboveobjectives was unimpressive throughout the 1970s, andthere was no significant increase in real annual expendi-tures despite the rising concern over energy supplieswhich had developed from 1974 to the end of the1970s. Figure 3-20 shows the evolution of Federal Gov-ernment energy RD& D budgets from 1974 to 1979, incurrent and constant dollars. Provincial government ex-penditures are not included in Figure 3-20.

47

An Evolving Federal View of Energy Strategyin Canada

Foreword, An Energy Policy for Canada - Phase 1,1973

The attainment of many of our national goals isdependent on our continued access to low-cost sup-plies of energy: the growth in our standards of living,as individuals and as nations; the improvement in thequality of life, in the choices available to us.

At the international level we have heard expressionsof concern about the availability and cost of energy inthe future. In Canada we have had the good fortune tobe endowed with substantial supplies of all five mainsources of energy: coal, oil and gas, hydro power anduranium. But with our climate, and with the transporta-tion demands imposed on us by our vast land-area,our demand for energy is also substantial.

Foreword, An Energy Strategy for Canada: Policies forSett-Reliance, 1976

While our proved reserves of oil and low-cost gascontinue to decline. Canadian demands for theseenergy forms continue to increase. The growing gapbetween our energy demands and our ability to supplythem from domestic reserves suggest that we couldbecome increasingly dependent on the rest of theworld, and the Organization of Petroleum ExportingCountries in particular, for our future oil supplies. Thisprospect carries with it economic and political riskswhich the Government of Canada views with concern.

We have, within Canada, the people, the equip-ment, the expertise and the potential energy resourcesto reduce substantially our dependence on importedoil. We can do this by reducing the rate at which ourenergy requirements grow in t1^ future, by substitutingthose energy forms which are in relatively abundantsupply in Canada for those that are not, by accelerat-ing the search required to find new oil and naturalgas — to convert the potential of our undiscoveredenergy resources to proved reserves from which ourneeds can be supplied. All of these options will beexpensive, but all must be pursued...

The National Energy Program 1980, p. 9

...Canada's energy problem is not only manage-able, but its solution can draw from many options.Canada has the diversified energy resource baseto support a relatively quick and clean shift awayfrom world oil. Canada also has the time to makethe transition to an economy that is more efficientin its use of energy, and more dependent uponrenewable energy sources.

Figure 3-20: EVOLUTION OF FEDERAL GOVERN-MENT ENERGY RD&D BUDGETS INCURRENT AND 1974 DOLLARS

240

f zoo^ 1 6 0

1

Cana

dian

Do

— —

Current prices

— — _

- -1974 prices

1974 1975 1976 1977 1978 1979

Source: After International Energy Agency, 1980b, p. 114.

In 1979 the total Federal expenditure on energyRD&D amounted to slightly more than $162 million,broken down in general terms as follows (IEA, 1980b):

Conventional Nuclear $103.6 million (63.8%)Fossil Fuels 16.5 million (10.2%)New Energy Sources 21.7 million (13.4%)Energy Conservation 12.5 million ( 7.7%)Nuclear Fusion 2.9 million ( 1.8%)Supporting Technologies.... 5.1 million ( 3.1%)

TOTAL $162.3 million

This amountej to only 15.5% of total Federalexpenditure on RD&D and represented a decline of4.5% from 1978 in real terms. Clearly a re-examinationof funding for energy RD& D in this country is in order.We will not be able to exercise our various energyoptions if sufficient support for their development is notforthcoming.

The 1980 National Energy Program is the mostrecent statement of the Federal Government's view ofCanada's energy situation. Perhaps one of the mostsignificant aspects of this statement is an increasedemphasis on reducing our energy demand as well asincreasing the use of alternative energy sources.

The 1980 program states that our commitment todeveloping nuclear technologies will continue but theoverall emphasis on energy RD&D will shift towardsfinding alternatives to gasoline, increasing the efficiencyof energy use and developing new energy sources. It isin the context of such a shift in emphasis that this Com-mittee was established and it is in this atmosphere thatour report will be considered.

48

THE ENERGY SYSTEM TODAY

The following illustration (Figure 3-21) is included toshow the relative emphasis which has been placed inrecent years on renewable energy technologies andconservation. Again provincial funding is excluded from

the totals. Funding for RD&D in these areas is beginningto expand and the Committee urges increased andsustained support so that recommendations containedin this Report may be acted upon.

Figure 3-21: EVOLUTION OF FEDERAL GOVERNMENT ENERGY RD & D BUDGETS IN MAJOR ENERGYTECHNOLOGY AREAS

— 120

•RVATIL. AND CONVENTIONAL NUCLEARNERGY SOURCESAAFUSLQNAND s u p p 0 R T | N G TECHNOLOGIES

1974 1975 1976

Source: After International Energy Agency, 1980b, p. 113.

1977 1978 1979 (Est.)

49

The Problem With Oil

O il is not merely an economic commodity.It is a source of enormous political leverage in

the hands of the major oil producing nations. Anyrealistic assessment of the cost of oil must includenot only the price in dollars and cents, but also theprice in terms of political, military and other conces-sions which producing countries can extract as acondition for supplying oil. Virtually all the OPECproducers, particularly those in the Middle East,have used their oil at one time or another to pursuenoneconomic objectives. Oil has been used to influ-ence the foreign policies of consuming countries,the most significant example being the Arab boy-cott during the 1973 Arab-Israeli dispute. Oil hasbeen used to induce the United States, France,Germany, Italy, Japan, and Brazil to tradeadvanced weapons systems and technologieswhich have military applications, to the Middle East.Oil has been used to obtain other economicconcessions including assistance in building refiner-ies, petrochemical plants or other industries whichotherwise would not have been granted.... (U.S.Senate Committee on Energy and NaturalResources, 1980, page 29.)

Organization of Petroleum Exporting Countries(OPEC)

Prior to the formation of OPEC in 1960, con-trol of the world petroleum business lay primarilyin the hands of the major oil companies and pricechanges were arranged through a distributors'cartel. With the aim of preventing oil price reduc-tions and improving their negotiating position, anumber of oil-producing countries held discus-sions concerning a united pricing and productionpolicy, culminating in the formation of OPEC on10 September 1960, in Baghdad. The foundingfive countries were Saudi Arabia, Kuwait, Iran,Iraq and Venezuela. Today the membership ofOPEC stands at thirteen: Saudi Arabia, Kuwait,Iran, Iraq, the United Arab Emirates (whose oil-producing members include Abu Dhabi, Dubaiand Sharjah), Qatar, Libya, Algeria, Nigeria,Gabon, Ecuador. Venezuela and Indonesia.OPEC's estimated crude oil production in 1980was 26.8 million barrels/day, or 45% of worldcrude liftings of 59.7 million barrels/day.

Organization of Arab Petroleum ExportingCountries (OAPEC)

On 9 January 1968, Saudi Arabia, Kuwaitand Libya concluded an agreement in Beirutfounding OAPEC, with membership restricted toArab countries in which oil represented the mainsource of national income. Algeria, Abu Dhabi,Dubai, Bahrain and Qatar joined in 1970 and Iraqin 1972. In late 1971, the Beirut agreement wasmodified to allow membership of any Arab nationin which petroleum represented an "important"source of national income. Syria then joined in1972 and Egypt in 1973, although Dubai withdrewfrom OAPEC in late 1972. OAPEC precipitatedthe oil embargo of late 1973, leading to the firstexplosion in world price. In April 1979, Egypt wassuspended from OAPEC membership but, forconsistency in statistical reporting, Egypt's oil pro-duction is still often included in the OAPEC total.OAPEC's crude oil output in 1980 was approxi-mately 19.6 million barrels/day, about 33% ofworld production.

The world petroleum market is susceptible tomanipulation for a variety of reasons. OPEC controlsalmost 70% of global conventional crude oil reservesand one member alone, Saudi Arabia, holds approxi-mately 27% of the total. This small group of nationsalso possesses the greatest capacity to expand produc-tion in the short term. With OPEC accounting for a littleless than half of the world's oil output while holding morethan two-thirds of its reserves, it is apparent that otheroil-producing countries are compelled, at least in relativeterms, to overproduce their oil resources. The oil pro-ducers in the Middle East could, on average, sustaincurrent levels of output for nearly half a century; theUnited States and Canada have little more than adecade of oil left at the current rate of production withtheir present proved reserves. In a world in which oil isthe dominant energy commodity, now accounting forabout 45% of primary energy consumption, this is adegree of resource concentration holding profoundimplications.

Oil is an essential component of the energy systemin every industrialized nation and fuels all conventional

51

military machines. Over half of the oil involved in interna-tional trade passes through the Strait of Hormuz at theentrance to the Gulf of Arabia, at a rate of about 18million barrels per day. In a typical 24-hour period, 70 to80 ships use the Strait, including the world's largestsupertankers. Roughly 90% of Japan's total oil require-ments are shipped via this narrow passage, as are 60%of Western Europe's oil imports and about 30% of U.S.imports. The invasion of Afghanistan brought Sovietmilitary forces to within 550 kilometres of the Strait,adding to the anxieties of the oil-importing nations.

In a number of other ways, OPEC is moving tostrengthen its ability to control the world petroleummarket. During the 1970s, host governments national-ized most of OPEC's oil fields, relegating the petroleumcompanies to the role of operator. The oil-producingcountries are also moving more towards direct sales viagovernment-to-government transactions. Prior to the1973 embargo, more than 75% of the oil extracted byOPEC was marketed by the major oil companies; by1979, the figure had dropped to less than 50%. The

ability of the oil companies to act as a buffer betweenconsuming and producing countries — notably to re-route supplies in the event of emergencies — is conse-quently being lost.

OPEC also is seeking to extend its control throughdiversification into downstream petroleum activities suchas refining and shipping. Such diversification allowsOPEC to earn more revenue for each barrel of oilproduced (thereby diminishing the need to expand pro-duction), and allows producers to extend their influencein the marketing process. Some European refiners haveeven agreed to process crude while allowing the produc-ing country to retain title to the oil throughout therefining process. This also grants the producing countrymore power to control the destination of its petroleumexports.

This concentration of power in the hands of OPEChas paralleled the decline of the United States in worldoil affairs. At the end of World War II, the U.S. was notonly the world's largest producer, but its output exceed-ed that of all other countries combined. As recently as

Figure 3-22: WORLD CRUDE OIL PRODUCTION BY REGION, 1930-1980

WORLD CRUDE

PRODUCTION

WORLD TOTAL PRODUCTION

~ ^ > E U R O r e (including U.S.S.R.)

SOUTH AMERICA

(MIDDLE EAST and FAR EAST)and AFRICA

NORTH AMERICA

1«40 1945 1950 1KB 1K0 1985 1J70 1J75

Source: DeGolyer and MacNaughton, 1980, p. 4: i.-td Auldridge, 1980, p. 78-79.

52

THE ENERGY SYSTEM TODAY

1963, the United States still accounted for more thanhalf of all the crude oil that had ever been produced.Today the United States is the world's third largestproducer, with the Soviet Union standing first and SaudiArabia second. The decline of American influence ininternational petroleum affairs is indicated inFigure 3-22, which outlines world oil output by regionsince 1930. With U.S. crude output having peaked in1970, American influence on the world petroleum scenehas declined rapidly over the past decade.

While other parts of the world, most notably theNorth Sea and Mexico, have risen in prominence asoil-producing regions, OPEC will continue to be thedominant influence in the petroleum market for manyyears to come^ Reducing dependence on foreignpetroleum should thus be an overriding concern of na-tional policy in the countries of the Western World. Thissituation also drives home the consequences of allowingone nonrenewable energy commodity to dominate anenergy system. -.-.-. . , - '

53

Guiding the Development

W e have seen what Canada's energy system lookslike today but how should it be structured

tomorrow? Certainly, the tact that we presently dependso heavily on hydrocarbons for primary energy meansthat if we get off this energy source by substitutingalternatives, the energy mix of tomorrow will have to beradically different. But how will it be different? Whatshould the guiding principles be in developing a newenergy system and what emphasis should be placed onthe options available to us?

The Committee believes there are a number ofprinciples which should be embodied in Canadianenergy policy.

(1) We should make every effort to reduce energydemand by practicing conservation.

(2) In the long term, energy should be derived primarilyfrom renewable and/or inexhaustible sources ofenergy.

(3) The production of the primary energy we requireshould be achieved with as Me environmental dis-ruption as possible.

(A) We must achieve greater diversity in Canada'senergy mix.

(5) We must recognize regional differences in energyresources and in energy requirements.

(6) We must address strategic concerns in formulatingenergy policy.

(7) We must adequately consider the social implicationsof bringing about major changes in Canada's energysystem.

In proposing energy policy for the "foreseeablefuture", the Committee divided the future into the shortterm (1980-1990), medium term (1990-2000) and longterm (beyond the year 2000). While energy developmentover the next 20 years is easier to predict than in thelong term, and thus tended to claim our attention, it isclear that some of the recommendations we are makingmay require a half-century or more to be fully achieved.Although the fundamental reshaping of Canada's energysystem will not be accomplished in this century, theprocess of reshaping should be well underway by thedawn of the 21st century. The Committee has beenfaced therefore with making recommendations that not

only improve Canada's energy position in the short termbut which also are compatible with the long-term evolu-tion we are trying to promote in this complex system.

We have not deluded ourselves into thinking thatour conclusions and recommendations represent thefinal word in energy policy. For this reason we have triedto develop a strategy which will be flexible enough toadapt to changing or unforeseen circumstances, eventhough this may delay the attainment of the objectiveslisted above. We know that conditions can change veryrapidly — economic shifts such as changes in therelative prices of petroleum and its alternatives canoccur at any time; the introduction of new technologiesor new energy sources might dictate a revision of long-term goals; and political developments at the domesticor international level could make the achievement oflong-term objectives effectively impossible.

1. CONSERVATION AND ENERGY EFFICIENCY

From an early moment in the Committee's exist-ence it became apparent that encouraging energy con-servation would have to be a major recommendation ofthis Report. Witness after witness extolled the impor-tance of conservation practices by pointing out thatconservation is the easiest and least expensive means ofreducing the energy supply-demand gap. This, then, is amajor goal of our alternative energy policy, because bysimply reducing energy demand, we moderate energysupply constraints.

The Committee realizes that conservation has beenpromoted by a variety of groups and governments overthe past decade and that this is not a new recommenda-tion. Nonetheless, we wish to add our voice to thosealready advocating conservation and, in so doing, hopeto make the message clearer and stronger. We want tohelp promote a sense of urgency that will motivate allCanadians to continue and expand their conservationefforts in all sectors of the economy.

Conservation practices should not bring about areduction in our standard of living. The Committee doesnot see Canadians doing "less with less" but rather"more with less" or, at least, more with greater efficien-cy. For example, new television sets now consume much

57

less energy during operation than did earlier models butthe quality of the picture hasn't diminished — it hasactually improved. This is due to technological innova-tion and serves to illustrate the philosophy the Commit-tee wishes to advocate — do more with less. We believethat achievements of this type must be realized in all ourprivate, commercial and industrial activities.

A conservation problem can be tackled in a varietyof ways. Consider, for example, the objective of reduc-ing the amount of heating fuel used to heat a home. Onecan turn down the heat or insulate the home. Of course,there is a limit to the amount of energy which can besaved by turning down the thermostat because discom-fort would soon prevent anyone from allowing the tem-perature to fall too far. But the second option of retrofit-ting a home to make sure heat is not being lost becauseof poor construction can generate savings with noattendant discomfort. Ideally, one should insulate andturn down the thermostat, thus encouraging maximumenergy savings.

This brings us to the second part of the title of thissub-section — energy efficiency. When most of thehomes and industries, indeed nearly all of Canada'sinfrastructure, were being designed and built, energyefficiency was not a major factor taken into consider-ation. It made little sense to heavily insulate houseswhen the cost of that insulation took years to recover,fuel costs being so low. Similarly, it made no economicsense to invest a large amount in building an energy-effi-cient industrial complex when energy was cheap; thecost of building in that efficiency might never beregained in terms of the amount of money saved byspending less on energy. Thus, because energy was socheap, energy inefficiency was actually built into oureconomy.

Now the tide has turned. Few see us ever againliving in an age of inexpensive and plentiful energy. TheCommittee does not wholeheartedly share this pessimis-tic view, but we do realize that energy will become anincreasingly valuable and expensive commodity forsome decades to come. This is not to suggest thatCanadians can look forward only to a steadily diminish-ing standard of living or to a continuous reduction intheir quality of life. It does mean though that we havebeen forced to recognize that from now on, energyefficiency is perhaps the first and foremost factor whichmust be taken into consideration in building the Canadaof tomorrow. We have been forced to take literally theold saying, "Waste not, want not!"

Taking a positive look at the Canadian energy situa-tion, we see this energy inefficiency as a unique energyopportunity — the energy we waste every day is anenergy resource which can be readily tapped. In otherwords, not only are we endowed with a considerablearray of conventional and nonconventional natural

energy resources but, since we spend more energy perdollar of GNP generated than other countries, we have atremendous "conservation resource" which can beexploited as well. Therefore, by setting out to buildenergy efficiency into all aspects of every Canadianactivity, whether it be industrial, commercial or social,we can save a very significant amount of energy. And byso reducing energy demand, we can bring our countrythat much closer to the goal of energy self-sufficiency inall energy forms.

The Committee believes, then, that energy efficien-cy must be built into all our endeavours starting now. Werecognize that the conservation resource which can betapped will diminish as time progresses and we weedout inefficiency but this does not mean conservation willbecome less important. It simply means it will becomean integral part of the system and will make a contin-uous contribution towards keeping our energy demanddown. The real energy crunch will probably occur duringthe next one to two decades. We are fortunate that theconservation resource is exploitable now, when we verymuch need it. It would be foolish to deny its importanceand its potential.

2. RENEWABLE AND INEXHAUSTIBLE SOURCESOF ENERGY

Canada must place new emphasis on deriving itsenergy requirements from sustainable sources of energy.We must ultimately shift our dependence away fromnonrenewable fossil fuels for the simple reason that theirsupplies are finite. As stated in Canada's Energy SystemToday, it is true that these supplies will not be exhaustedfor some time to come, and that depletion will occurmore quickly for some forms than others, but the finalresult is inevitable. Society cannot go on indefinitelyexploiting fossil hydrocarbons for energy. This Reportconsiders some of the reasons why it is advantageous tobegin the transition to sustainable energy forms soonerrather than later.

Renewable energy sources are those which arenaturally replenished with or without human intervention.The winds and tides are examples of sources of energywhich will be available in limited supply in perpetuitywithout human management, whereas biomass is renew-able as an energy resource only if properly managed.Inexhaustible energy supplies are those such as solar orfusion which offer the promise of providing all the energymankind is ever likely to require if they can be adequate-ly and safely harnessed.

Moving Canada's energy system to phase out non-renewables and to incorporate renewables and inex-haustibles will not be a simple task nor one which isachieved overnight. It will take commitment, a lot of hardwork and money and, perhaps most important, time.

58

THE ENERGY SYSTEM TOMORROW

Certainly, if we hope to remould our economy with aminimum of disruption to the quality of life we havecome to expect, we must get on with it as soon aspossible. This means there will be an extended transi-tional period, several decades in duration, when neitherthe system we know today nor the one we envisage forthe future will be in place. In this interim, we will have tocontinue and even augment the use of certain hydrocar-bons while developing alternative energy sources andtechnologies to the point of commercialization. This isseen as necessary to "buy time", but the ultimate goalof our alternative energy policy is to phase out the use offossil hydrocarbons as sources of energy.

The transition period will be a challenging time butone which offers unique opportunities for Canada. Allnations will at some stage have to face the reality ofgetting away from using nonrenewable energy resourcesand if we develop the alternative technologies which willeventually be required by the rest of the world, ourexport opportunities will be unprecedented. Specificefforts which should be begun immediately are offered inthe form of recommendations throughout this Report butthey are concentrated primarily in the chapter on Alter-native Energy Sources, Currencies and Technologies.

3. ENVIRONMENTAL CONCERNS

The exploitation of energy cannot be accomplishedwithout having some effect upon the environment, butdifferent energy options affect the environment in differ-ing ways and degrees. Some forms of energy develop-ment are more ecologically benign than others and theCommittee wishes to emphasize that its investigationhas been pursued taking environmental concerns intoconsideration at all times. It would not make sense toformulate an energy policy which would solve energyproblems but create serious environmental ones.

Many of our seemingly most intractable environ-mental problems arise out of our overwhelming depend-ence upon hydrocarbons as sources of energy. This isbecause both the fossil fuels themselves and their com-bustion products are pollutants when released into thebiosphere.

Natural gas is the cleanest of the hydrocarbon fuels.Being a gas, it is easily dispersed when released to theatmosphere and, depending upon the completeness ofcombustion, produces predominantly carbon dioxideupon burning. Oil in its various forms is more polluting,being a complex, biologically toxic substance to beginwith and releasing a variety of materials upon combus-tion, including hydrocarbons, particulates, carbonmonoxide (CO), carbon dioxide (CO2). nitrogen oxides(NO,), sulphur dioxide (S02) and heavy metals. Coal isyet again more polluting, producing a significantly great-er quantity of the same types of pollutants derived from

liquid hydrocarbons but also bringing about significant"ecological damage during the mining process. Stripmining, acid mine wastes, particulate release duringtransportation and burning, erosion and occupationalhealth hazards such as black lung disease all contributeto making coal the least environmentally acceptabletype of fossil fuel.

Two of today's most disturbing environmental prob-lems are acid rain and the accumulation of carbondioxide in the atmosphere, and both of these phenome-na result primarily from the combustion of fossil fuels.Thus environmental concern has been a major factor incausing the Committee to believe that a new energysystem in Canada should be one which is not basedprincipally upon the combustion of hydrocarbons.

A. ACID RAIN

Acid rain was once thought to be a problem of onlylocal magnitude, such as the acidification of lakes inclose proximity to mineral smelting operations. However,it has now been shown that acid rain is a widespread,even global, problem whose ecological effects maybecome most significant.

Acid rain is not new. In 1852, residents of Swansea,Wales complained about the effects "corrosive rain"caused by the local coal industry was having on theircattle and the vegetation of the region. It is, however, agrowing problem with Europe, Scandinavia, Japan andNorth America all beginning to recognize its detrimentalecological, social and health effects. In 1979, the prelim-inary report of the joint Canada-U.S. group studying theLong Range Transportation of Air Pollutants (LRTAP)"identified acidic precipitation as the problem of great-est common concern at the present time."

The reason acid rain has made headlines only inthelast few years is that scientists have just recentlymanaged to accumulate enough data to begin toappreciate the geographical extent and the severity ofthe problem. Acid rain is not immediately or obviouslydamaging and, for this reason, it can be termed aninsidious pollutant; ecological consequences onlybecome apparent after enough acid has accumulated,over a considerable length of time, to bring about anobservable effect. Many environmentally-concernedpeople believe that by the time damage becomes bla-tantly obvious, too much acid will have accumulated forameliorative action to be taken at reasonable cost toprevent rapid environmental deterioration.

More is known about the effects of acid rain onsome sectors of the environment than on others. Forinstance, a good deal is known about the effects of

59

FoimattonofAcldRalnAcid rain is formed when rainwater is con-

taminated by acid. Pure water is a neutral com-pound and. as such, is neither acidic nor alkaline.However, even natural unpolluted rain is not purewater; it is really a dilute solution of carbonicacid — an acid which forms when atmosphericcarbon dioxide dissolves into water vapour in theair.

Many compounds can become incorporatedin rain drops and some of them, such as soilparticles, can make rainwater more basic or alka-line. Other compounds such as sulphur dioxideand nitrous oxides — two of the combustionproducts of fossil fuels — can dissolve in rainwa-ter and make it more acidic than normal.

Although all the intricacies of the variouschemical reactions which take place in the atmos-phere during the formation of acid precipitationare not completely understood at the presenttime, the end result is that the oxides of sulphurand nitrogen are converted to sulphuric and nitricacids respectively. These are strong acids whichdissociate almost completely in water and havethe ability to lower the acidity of rainwater signifi-cantly. In fact, the most acidic precipitation yetrecorded fell in Scotland in 1974. It was roughly asacidic as vinegar or dilute acetic acid and overone thousand times as acidic as natural rain.

acidification of aquatic ecosystems (environments) butmuch less is known about its effects on terrestrial orland ecosystems such as forests or agricultural crops.

The direct effects of acid rain on human health haveyet to be fully described. There is concern that thesulphur dioxide from which acid rain primarily derivescan affect the health of people afflicted with respiratoryproblems. Acidic water passing through metallic pipescan increase copper and lead concentrations in drinkingwater and even some natural spring waters from areaswhich have been exposed to heavy acid rainfall haveshown elevated levels of lead, copper, aluminum, mer-cury and cadmium. All these metals can affect humanhealth but the extent of the effects and their associatedhealth costs have yet to be quantified.

Acidic precipitation can also deleteriously affecthuman artifacts. It can greatly accelerate erosion pro-cesses, causing buildings, roads, paint, sculptures andso forth to be aesthetically and functionally damagedwith prolonged exposure. The cost of these damages tothe urban environment are estimated to exceed $5billion annually in North America alone.

B. THE CARBON DIOXIDE QUESTION

As more and more people discover that acid rain isnot a new phenomenon, they begin to wonder why theyhaven't heard of it before now. There are a number ofreasons for this but the dominant one is that in oursociety little effective long-range planning is done andmost environmental problems are ignored until they areperceived as having reached serious proportions. This isprecisely what the Committee hopes to avoid by plan-ning an energy future which will not produce difficultecological "surprises" that will have to be dealt with inan ad hoc fashion at some future date.

Thus, enter the "Carbon Dioxide Question". Theterm "question" as opposed to "problem" is used herebecause the repercussions of the well-documented andsteady increase in the concentration of carbon dioxidein the Earth's atmosphere are, at present, contentious.But in the opinion of the Committee, this is no reasonthey should be ignored. On the contrary, this is evengreater reason to investigate the phenomenon thorough-ly and to plan an energy future which does not alterhistorical environmental balances, so that a potentialproblem of truly global proportions will not have to begrappled with 20 to 50 years from now. Certainly, along-term perspective is called for in the case of thecarbon dioxide question.

Much of the public has not yet heard about thecarbon dioxide pollution phenomenon. But measure-ment of the concentration of C02 in the atmospheremade at a variety of locations, and over a time spandating back to 1958, have clearly and unambiguouslydemonstrated that the concentration of CO2 in theatmosphere is rising at a rate of about one part permillion (1 ppm is 1 milligram in 1 kilogram) per year(Figure 4-1). To put this figure into perspective, theconcentration increased 13.8 ppm in the 15 years be-tween 1962 and 1977 — an increase from 316.2 to330.0 ppm or over 4%. Since 1850 and the beginningof the Industrial Revolution, the increase has been fromaround 290 to 330 ppm, or approximately 14%. If thetrend of the last 20 years continues or accelerates, theCO2 concentration could well reach 400 ppm by theyear 2000 — a concentration which could begin tochange the Earth's climate, perhaps irreversibly.

Historically, there is evidence that the atmosphericconcentration of carbon dioxide has remained approxi-mately constant for past ages because a balance exist-ed between (1) the amount of CO2 being turned intosolid organic compounds annually through photosynthe-sis and the amount being released annually throughboth plant and animal respiration; and (2) the amount ofCO2 dissolving into or escaping from the oceans. How-ever, it should be emphasized that this balance wasachieved with a small but steady net loss of carbon from

THE ENERGY SYSTEM TOMORROW

Figure 4-1: THE CONCENTRATION OF CARBONDIOXIDE IN THE EARTH'S ATMOS-PHERE

-314312

1960 1964 1968 1972 1976Source: After Kellogg, 1978, p. 15. Reprinted by permis-

sion Of THE BULLETIN OF THE ATOMIC SCIEN-TISTS. Copyright © 1978 by the EducationalFoundation for Nuclear Science. Chicago, III.

this dynamic cycle over millions and millions of years.The CO2 which was removed from circulation and storedunderground in the remains of once-living organisms isnow termed fossil fuel. Thus, when we burn fossil fuelswe release carbon which was taken up from the atmos-phere by living plants and stored millions of years ago.When we cut down trees we aggravate the problemfurther because (1) this reduces total photosyntheticactivity; (2) the trees release CO2 when they are burnedor decompose; and (3) their removal bares the soil'ssurface and allows the humus content of the soil todecompose, releasing even more CO2 to the atmos-phere.

Measurements have shown that the annual harvest-ing of forest biomass releases approximately the sameamount of C 0 2 as does the combustion of fossil fuels.This means that no great global dependence uponbiomass for energy can be tolerated and that for thebiomass which is used there must be a policy of com-plete replacement. Unfortunately, this seems to be anunlikely prospect because even without a large-scalecommitment to biomass energy the size of the Earth'sforests is rapidly diminishing.

It is perhaps difficult for many to think of carbondioxide as a pollutant because it is a natural and essen-tial component of our atmosphere. But it is not the gasitself which is the problem; it is its atmospheric concen-tration which is potentially environmentally disruptive.This is because there is an intimate relationship betweenthe amount of CO2 in the air and the Earth's temperatureand climate.

TheThe atmosphere is composed of molecules

we are all familiar with (oxygen, nitrogen, carbondioxide, water vapour and so forth), but not every-one is aware that these molecules have the abilityto absorb energy of certain wavelengths. Mostatmospheric gases, including carbon dioxide, aretransparent to the relatively short wavelengths ofincoming solar radiation; thus much of the incom-ing energy passes through the atmosphere to beabsorbed or reflected by the Earth's surface. Atlonger wavelengths — the wavelengths at whichthe Earth reradiates — CO2 and water vapour arethe two main energy-absorbing molecular speciesin the atmosphere.

When these molecules absorb energy, theycause general atmospheric warming, a phenome-non commonly called the "greenhouse effect"because it is roughly analogous to the warming ofa glassed enclosure. A greenhouse is transparentto incoming solar radiation but it impedes heatloss (in this case by preventing convection) andconsequently warms up. If the atmosphere warmsbecause of increased energy absorption due toelevated concentrations of CO2, the surface tem-perature of the Earth will also rise by means ofheat transfer.

The oceans contain a tremendous amount ofcarbon and they have traditionally been called a sink foror absorber of CO2, but it is now becoming apparentthat the seas may not be the answer to reducing or evencontrolling the steadily increasing concentration ofatmospheric carbon dioxide. (In 1980. the combustionof fossil fuels was expected to release the equivalent of5.57 billion tonnes of CO2 (Munn et a/, 1980) anddeforestation probably released an equivalent amount.)There seems to be little dispute that the world's oceanicreservoirs could absorb all the CO2 man is ever likely togenerate, even if he burns the Earth's entire fossil fuelresources. The question is one of time.

Various research techniques have indicated that therate of turnover of the ocean's thermally stratified watersis very slow. The warm surface waters (some 100 to 200meters deep) mix with colder deep waters with anexchange time in the order of a thousand years or so.Thus if the surface waters of the oceans did becomesaturated with carbon dioxide, the removal of elevatedlevels of atmospheric CO2 could take an amount of timein the order of several human lifetimes.

What will the effects of this carbon dioxide accumu-lation be? Scientists indicate that if the air's concentra-tion of CO2 were to double, this would have the potential

61

to raise the Earth's mean temperature by a few degreesCelsius. Few seem concerned about this possibilitybecause they perceive such a change to be relativelyminor. Indeed, it is difficult for Canadians, who common-ly experience temperature changes of from 10 to 20degrees Celsius within a matter of hours or days, to beconvinced that a one to three degree change in theglobal mean temperature over a period of 20 to 70 yearscould be of any major significance. But such a modifica-tion could be most significant indeed. Increases in tem-perature would vary with latitude and although theincrease at the equator might be insignificant for a twoto three degree mean global rise, temperatures near thepoles might increase by as much as 10-C. Thus it hasbeen suggested that the melting of the polar ice capscould be triggered by a mean global temperature rise ofonly one to three degrees Celsius. In fact, from the peakof the last glacial period (20,000 to 16,000 years ago) tothe peak of the warm interglacial period we are present-ly living in, the mean temperature of the ocean rose only2°C and the mean global temperature rose only 5°C.

There are many arguments to counter the idea CO2

will radically alter climate but on one point there isuniversal agreement. CO2 accumulation in our atmos-phere does pose a potential environmental or climaticthreat.

Few predictions call for carbon dioxide to havesignificant climatic effects before the year 2000 but itshould be noted that there are no currently-known fea-sible methods to bring about a significant reduction in theamount of carbon dioxide already released should C02

accumulation prove to be a real problem with an unac-ceptable environmental impact. This is most disturbingbecause the lead time for substituting alternate energysources for fossil fuels is measured in decades; the costof the transition is essentially incalculable; and eachalternative should 'itself be examined for potential unac-ceptable environmental impacts.

Scientists do not know exactly what a warmerclimatic regime would be like. Most agree that it wouldbe wetter in general but some areas, such as the interiorof North America, might become much drier. This couldhave extremely serious consequences in Canada if ourgrain-producing lands became too dry to supportagriculture. In addition, shifting of the growing regionnorth as temperatures moderate would not compensatefor this loss as the northern soils are too infertile tosupport intensive agriculture. In any event, changing thelength of the growing season and altering traditionalprecipitation patterns would almost certainly disruptestablished agricultural practices. Man might eventuallyharvest even more food with a warmer and wetter cli-mate but the confusion which would ensue followingmajor changes could bring about a long sequence of

lean years during adaptation. This is not a cheery pros-pect for a world which already has too many hungrypeople.

It is obvious that many questions about the relation-ship between carbon dioxide and climate remainunresolved. As the words of a 1977 National Academyof Sciences Report caution however:

Unfortunately, it will take a millenium for the effects ofa century of use of fossil fuels to dissipate. If thedecision is postponed until the impact of man-madeclimate changes has been felt, then, for all practicalpurposes, the die will already have been cast.

The Committee believes that steps should be takennow to begin to take this country away from the use offossil fuels as energy sources so that progress can bemade forthwith in establishing an energy mix which willnot contribute to carbon dioxide accumulation in theatmosphere. In doing this we will also benefit fromcurbing acid rain and reducing urban pollution resultingfrom the use of gasoline and diesel fuel in the transpor-tation sector.

We recognize that Canada's contribution to theglobal output of CO2 is small but a start at reducingcarbon dioxide emissions has to be made somewhere.Canada has a wealth of alternative energy sourcesavailable for development and is thus admirably suitedfor demonstrating to the rest of the world that aneconomy can be run on energy sources other thanhydrocarbons.

4. DIVERSITY IN ENERGY SUPPLY

People often make the misrepresentatie statementthat we are in an oil crisis. We are not — at least at themoment. But since so much of our energy is derivedfrom petroleum and since we cannot meet demand withdomestic supply, we are in a precarious position. Thisrealization has hopefully taught us that overdependenceon any one finite source of supply is shortsighted andfoolhardy. Certainly the Committee has concluded thatone important characteristic which should be aimed forin a new energy policy is a greater diversity in energysupply.

At present, Canada's energy future is not certain.For instance we do not know to what extent the politicaland economic climate in years ahead will permit thedevelopment of our oil sands resources or of ournuclear-electric potential. Nor do we know the speedwith which the technology of some of the alternativesdiscussed in this Report will be commercialized. Similar-ly, we do not know when fusion technology will bedemonstrated as technically and economically feasible.Reducing these kinds of uncertainties is important ifadequate and appropriate investment in energy is to be

62

THE ENERGY SYSTEM TOMORROW

Achieving a more diverse and flexible energysystem will not be without its attendant problems andcosts — diversification will require large investments ofcapital for the research, development and commerciali-zation of the alternatives. For example, equipment andbuildings which permit the use of a range of fuels andwhich lend themselves to flexible uses likely will havehigher initial costs than more specialized fuel- and use-specific equipment and buildings.

Diversity should not, however, be regarded as adesirable objective in itself. We must avoid spreadingour research and development efforts too thinly in aneffort to develop a myriad of energy technologies someof which may not be practical or economic. Nor shouldwe sacrifice the economics inherent in centralized plantsand large-scale energy transmission systems when thesecan serve large populations and industrial activity at theleast cost.

Perhaps the greatest difficulty encountered in con-structing a more diverse energy system will be socialadjustment problems. Adjustments in employment willbe necessary as industries which produce inefficient orinflexible energy-consuming products are eliminated byeconomic and political pressures. Income effects andlife-style changes are likely.

We feel, however, that the costs of a more diversi-fied energy system will be small compared to the ben-efits. Environmental quality will be enhanced. Self-suffic-iency will permit greater economic stability. Lessuncertainty will encourage growth. The moderated influ-ence of monolithic energy supply corporations maypermit greater economic freedom for all of us. Further-more, the flexibility of a diverse energy system willfacilitate adjustments to sudden changes in worldenergy supply and price and promote more rapid adjust-ment in the domestic energy mix. Conservation wi!! serveas a motivating force in seeking paths to diversificationbut supply constraints will also encourage us to diversifyour energy mix.

Diversification of our energy system may be pro-moted by following a variety of paths simultaneously.These include the following:

• Substitutabinty. equipment design and the use of fuelswhich lend themselves to substitutability to reflectchanges in prices and supply will be important.

• Flexible design: building construction and equipmentdesign should allow for changes in seasonal applica-tions and for changes in life-styles, and should beadaptable to improved technology.

• Multi-component systems: will be necessary to takeadvantage of changes in the availability of energysources. For example, it may be desirable to have twoor even three sources of heat in a house provided thisis economically feasible.

• Ease of retrofit design and construction should fore-see the need to make fundamental changes to energysystems.

Canada must lay the scientific and policy ground-work to engender a more diverse supply and utilizationof energy for the future to exploit the potential of itsresources, to improve energy security and to gainexperience in energy management. The Committeetherefore believes that short- and medium-term energystrategy should avoid an overwhelming dependence ona few energy forms or technologies and emphasizeinstead the development of diverse energy alternatives.

5. REGIONAL CONSIDERATIONS

From a domestic point of view an alternative energypolicy can and must take this country's vast regionaldifferences in energy resources and energy demand intoprime consideration. No one source, technology or cur-rency is equally applicable to all parts of Canada and itwould be foolish to once again paint Canada one energycolour. Just as a nation benefits from taking advantageof its best opportunities in trade with other countries, socan each region of Canada benefit by developing alter-native energy sources and technologies which exploit itsparticular advantages.

We are not advocating that each region strive tortotal energy independence, since such independencemay be neither feasible nor a wise use of capitalresources. We do believe, however, that a better bal-ance than exists today in the domestic supply of energyfrom region to region is a goal well worth striving for inpromoting economic well-being across the country.

The alternative sources of energy which may figurein Canada's future are well suited to a new, regionallydiversified energy policy in that several of them arefound across the country. In addition, they are notlimited in the strict sense of the word — wind, solar,geothermal and biomass energy all being characterizedas immense energy resources. They may also bedescribed as diffuse however, so a limiting factor is theavailability of technologies to exploit these resourceseconomically — technologies which will allow us tocollect, concentrate and/or convert these resources tomeet our energy requirements.

The following maps depict the availability of someof the renewable energy sources across Canada andeach is accompanied by brief notes explaining the sig-nificant features of the resource.

A. SOLAR ENERGY

Figure 4-2 shows the mean daily solar radiationincident upon a horizontal surface in Canada. The units

63

Figure 4-2: MEAN DAILY SOLAR RADIATION IN CANADA, MEASURED ON A HORIZONTAL SURFACE ANDAVERAGED OVER THE YEAR

Source: Canada. Oepartment of Energy. Mines and Resources, 1980d.

on the map are "Langleys", a Langley being equivalentto 11.6 watthours/nWday. One can see that across themost heavily populated parts of Canada the solar radia-tion over the year averages about 300 Langleys per day.This means that one square metre of horizontal solarcollector would receive about 3.5-4.0 kilowatthours ofradiant energy per day in this region. (This can becompared to one litre of heating fuel which deliversabout 10 kWh of energy.) Of course, only a portion ofthis energy will be captured by collectors as they varygreatly in their collection efficiency.

Canada compares favourably with most countriesof the world in terms of average solar radiation received,but this average value is less important than the season-al distribution of solar energy. We receive the majority ofour solar energy during the long, sunny, summer daysand considerably less during short winter days. Thus,unfortunately, the peak in energy supply is opposite to

that of space heating demand. This should not, how-ever, be taken as an indication that solar energy willhave a negligible role to play in a new energy mix. Itsimply means that in Canada we will have to use solarenergy in those applications which are best matched tothe availability of the resource.

Examples of such optimized applications are swim-ming pool heaters, specialized industries such as can-ning, and greenhouses where crops can be started earlyto lengthen the growing season. The careful design ofcollectors, efficient seasonal storage systems, and pas-sive solar structures, all taking the Canadian climate intoaccount, will be necessary if increased and widespreaduse of solar energy is to be encouraged.

B. WIND ENERGY

The map showing wind energy densities in Canada(Figure 4-3) indicates the areas with the best wind

64

THE ENERGY SYSTEM TOMORROW

Figure 4-3: ANNUAL AVERAGE WIND ENERGY DENSITY IN CANADA AT 50 METRES ALTITUDE

Source: Chappell. 1980. p. 2A.-20.

regimes. They are Atlantic Canada. Northern Ontarioand Quebec, and the southern Prairies. No readings forBritish Columbia are included since the topographicvariation in that Province makes it impossible to accu-rately indicate general trends. This should not be takenas an indication that British Columbia has no windenergy resource though. In fact, coastal B.C. is seen asone of the areas of greatest wind energy potential.Moreover, in mountainous parts of B.C. there are manysites where winds are funnelled in a way which makesthem ideally suited for power generation.

C. BIOMASS

Figure 4-4 presents an estimate of the number oftonnes of biomass which are produced per hectare peryear in Canada. This is a very generalized illustrationand, while it indicates productivity, it in no way accounts

for resource quality or for the ability to harvest thebiomass and get it to market. In this respect biomasspotential is similar to that of solar — it represents animmense and diffuse resource which awaits additionaltechnological answers if it is to be widely exploited.

It should be reiterated that unlike solar and windenergy, the exploitation of biomass potential requirescareful management of the resource. The sun will alwaysshine and the wind will always blow regardless of howwe try to exploit them, but when an area is harvested forthe biomass it supports today, it must be properlymanaged to ensure that the resource will be renewed.

D. GEOTHERMAL ENERGY

The map presented for geothermal energy (Figure4-5) differs from the previous three in that it does notattempt to quantify the size of the resource. It outlines

65

Figure 4-4: BIOMASS PRODUCTIVITY ZONES IN CANADA

UNITS:

Tonnes per hectare per year

ATLANTIC OCEAN

Source: Love and Overend, 1978, p. 8.

the areas of greatest potential for deriving geothermalenergy instead. Since geothermal energy is defined sim-ply as the natural heat of the Earth, a map such as thisonly indicates areas where the useful energy which canbe recovered is thought to be great enough to offset therecovery effort. As outlined in the Geothermal Energysection, the two regions of greatest potential are thearea of geologically recrnt volcanism in British Columbiaand the Yukon, and the Western Canada SedimentaryBasin underlying the Prairie Provinces.

Whatever the local resources available, risingenergy costs across Canada and incentives that encour-age the development of new sources of energy willcontribute to energy supply and demand developments.An unbiased approach will recognize regional differ-ences and allow each area to use funding to developwhat they perceive to be their best options. Incentivesfor alternative energy development should not, however,discriminate against the various options available on a

national basis. Although general guidelines and financ-ing must largely originate at the federal level, increasedcooperation between all levels of government in energy-related matters is imperative. We must not allow domes-tic quarrelling to lead Canada into unnecessarily costlyand Balkanized energy options.

6. STRATEGIC CONCERNS

Canada, whose people represent but one-half of1 % of all mankind, appears to the rest of the world as athinly-populated nation which is affluent and largelyself-sufficient in natural resources. This nation does notflourish in splendid isolation however. On the contrary, it& dependent for a large percentage of its GNP onforeign trade, trade which is mainly conducted with theUnited States, Western Europe and Japan. Canada'seconomic well-being is, therefore, tied to the prosperityand security of these three regions. The problem is that

THE ENERGY SYSTEM TOMORROW

Figure 4-5: GEOTHERMAL POTENTIAL IN WESTERN CANADA

250 MILESi . . . i J

Source: After Souther. 1975, p. 263; and Jessop, 1976, p. 5.

for the next quarter-century these three trading partners,along with Canada itself, will continue to require oilwhich is supplied in the main from an extremely unstableregion of the world — the Persian Gulf.

At the present time Canada is obliged to import anet amount of roughly 300,000 barrels/day of crude oil.According to the supply and demand figures projectedby the National Energy Board in its 1978 report, netcrude imports would rise to about 760,000 b/d in 1985and to 900,000 b/d by 1995, in its base case estimate.In a subsequent forecast and responding to world priceincreases to mid-year 1979, the Department of Energy,Mines and Resources projected that the crude shortfallunder then-current policy would grow to 640,000 b/d in1985 and thereafter decline to 335,000 b/d by 1995(Canada, EMR, 1979b). The National Energy Program,which makes an unprecedented commitment to modify-ing demand, foresees net imports of 260,000 barrels/day in 1985 and oil self-sufficiency attained by 1990(Canada, EMR, 1980e). This projection assumes, how-

ever, that the Cold Lake and Alsands Projects will beoperational and adding to nonconventional oil suppliesin 1987 (the completion of both projects is now inquestion), and petroleum industry forecasts do not ingeneral share the optimism of EMR's supply/demandscenarios. The Committee looks forward to the newNational Energy Board projections which are expectedto become available soon after the tabling of thisReport.

In 1980, almost 63% of Canada's imported crudeoil was purchased from Saudi Arabia and 25% camefrom Venezuela. Iraq and Kuwait each supplied approxi-mately 3.5% of our import needs and Mexico has begunto deliver small quantities of crude oil to Canada. Thusmore than two-thirds of Canada's imports are shippedfrom the Persian Gulf via the Cape of Good Hope invessels not of Canadian registry.

Defences against interruptions in this supply ofcrude oil are limited and weak. Under the InternationalEnergy Agreement (signed by Canada, Belgium, Den-

67

mark, West Germany, Ireland, Italy, Japan, Luxem-bourg, the Netherlands, Norway, the United Kingdomand the United States at Brussels in September 1974),Canada agreed to a plan for stockpiling oil and reducingconsumption in the event of sudden shortages. Basical-ly, each nation was to accumulate an emergency oilreserve sufficient to maintain consumption within itsborders for 90 days, without net oil imports. Canada hastechnically been able to meet this requirement (throughexisting tankage and pipeline fill) without establishing astockpile because the Agreement applied to the countryas a whole and not merely to the Atlantic Provinces,which rely on imported oil for virtually all their petroleumneeds and where a prolonged interruption in supplywould have a profound impact. As the necessity ofshipping oil from Western Canada to the East Coast viathe Panama Canal during the 1973 Arab oil embargodemonstrated, the Maritimes are extremely vulnerable tooil shortages. This is a matter of grave concern toEasterners.

The National Energy Program, tabled in the Houseof Commons on 28 October 1980, addressed this prob-lem by stating that it is a matter of national priority thata natural gas pipeline be extended beyond Quebec Citythrough New Brunswick to Nova Scotia to displaceimported oil used in space heating and in certain indus-trial processes. It was anticipated by the NationalEnergy Board that a natural gas pipeline extension tothe Maritimes could be in place and operating by late1983 and that it, coupled with an extension of thepipeline system in British Columbia to Vancouver Island,could displace some 44 million barrels of crude oilannually by 1990 (Canada, EMR, 1980f). But 1984seems more likely as a completion date for the Mari-times extension because delays have been encounteredin routing the pipeline.

CONCLUSIONThe Committee supports the Government ofCanada in proceeding immediately with theconstruction of a natural gas pipeline to theMaritimes. This should be an energy project offirst priority in the effort to diversify our energysystem and to reduce Eastern Quebec's andthe Maritime Provinces' overwhelming depend-ence on foreign crude oil.

In the realm of alternative energy, Canada partici-pates in RD&D through its membership in the Interna-tional tnergy Agency (IEA). The IEA has operated since1974 within the framework of the Organization for Eco-nomic Co-operation and Development (OECD) and hasas one of its basic aims, "co-operation among IEA Par-ticipating Countries to reduce excessive dependence on

oil through energy conservation, development of alterna-tive energy sources and energy research and develop-ment" (IEA, 1980b). The IEA coordinates specificprojects on alternative energy sources and technologies,and in 1979 Canada was directly involved in over 20such studies, including R&D in energy conservation, coaltechnologies, solar power, wind power, biomass energy,nuclear fusion and hydrogen.

Considering the wealth at Canada's disposal andthe professed commitment of Canadian Governments tooverall energy self-sufficiency, the actual contribution ofthis country to the international effort has been disap-pointing. In 1979. Federal Government expenditures onRD&D amounted to $163 million, a decline of 4.5% from1978 in real terms and an increase of only 3% from1974. In 1979, Canada was among the highest in percapita energy consumption in the IEA but (at the FederalGovernment level) ranked third last in the ratio of energyRD&D expenditures to total primary energy demand.Canada ranked eleventh in terms of per capita expendi-tures on energy RD&D, and conventional nuclear R&Daccounted for over 60% of the total expenditure.Energy conservation RD&D expenditures amounted to$12.5 million, or 7.7% of the total, and new energysource RD&D accounted for $21.7 million, or only13.3% of the total (IEA, 1980b, p. 14, 19, 109). In1978, provincial government expenditures on energy-related RD&D amounted to $99.9 million in total, or63% of the Federal expenditure for the same year.Table 4-1 sets forth the Canadian position relative toother IEA member countries. Clearly, Canada has a longway to go to match the efforts being exerted by mostother members. Even with provincial expenditures takeninto account, Cane da's effort, while more respectable, isnot impressive.

RECOMMENDATIONIn Ms own best interest and in the interest offurthering the objectives of the IEA, Canadashould accelerate the rate of increase in itsalternative energy RD&D expenditures.

7. SOCIAL CONCERNS

The lives and livelihoods of all people are unavoid-ably affected by energy concerns. Canadians in particu-lar are especially affected because they use energyintensively for a number of reasons. The extremes oftemperature experienced annually in this country areone factor and the broad geographical extent of ourland and the fact that it is sparsely populated are others.Nevertheless, no matter where one lives, basic humanrequirements for food and shelter can only be metthrough the expenditure of energy. This is not to say.

68

THE ENERGY SYSTEM TOMORROW

Table 4-1: ENERGY-RELATED STATISTICS FOR IEA MEMBER COUNTRIES, 1979

Country

IEAGovernment

EnergyRD&D

Budgets(US$

millions)(est.)"»

TotalPrimaryEnergy

Demand(TPE)

(mtoe)(l>(1978

figures)

GrossDomesticProduct(GDP)(US$

billions)(est.)

Population(millions)(est.)'»'

IEAGovernment

EnergyRD&D

per capita(US$

(est.)">

GDPper

Capita(US$

thousands)(est.)

TPEper

capita(toe)(est.)

Australia n.a. 69.0 120.5 14.434 n.a. 8.3 4.78Austria 31.9 24.9 68.9 7.506 4.25 9.2 3.32Belgium") 97.7 46.1 111.5 9.860 9.90 11.3 4.68Canada'* 139.2 203.4 222.8 23.691 5.88 9.4 8.58Denmark'" 31.0 19.3 65.6 5.120 6.05 12.8 3.76Germany"» 1048.0 270.2 755.8 61.337 17.09 12.3 4.41Greece 4.1 14.6 37.5 9.444 0.43 4.0 1.56Ireland»» 4.7 8.2 14.9 3.256 1.44 4.6 2.52Italy"» 213.2 139.5 318.6 56.888 3.75 5.6 2.45Japan 919.3 357.0 1021.6 115.880 7 . 9 3 ' 8.8 3.08Netherlands"» 111.7 64.2 151.8 14.030 7.89 10.8 4.58New Zealand 8.5 10.5 21.1 3.160 2.69 6.7 3.32Norway 39.5 21.3 45.3 4.074 9.70 11.1 5.23Spain 79.3 70.2 197.4 37.554 2.11 5.3 1.87Sweden 108.5 51.0 103.3 8.296 13.08 12.5 6.14Switzerland 52.6 23.8 94.1 6.318 8.33 14.9 3.77U.K.'"1» 389.2 212.2 391.2 55.783 6.98 7.0 3.80U.S 3783.4 1842.1 2 349.0 220.415 17.16 10.7 8.36

W Exchange rates used are annual averagestrcm the tMFJHtemaSbfia/f/nancia/Siaostics-C» FromOECD Main Economic Indicators. March 198aWTheexperKWuresotllwECMembercoumriesdonotindudelheircorilribulionslolheECpfogFamme.

«V With respect to nationalized Industries, the United Kingdom figures include only the expenditures on energy RD6D financed by government funds. Other expenditures bynationalized industries on energy R O D were £125.8 mmon in 1979.

(•> Excludes Provincial Government fiO&D budgets.

•" mioB " mBBon tonnss of 03 GQUivslsnt.

Source: International Energy Agency, 1980b, p. 18.

however, that consumption of more and more energyautomatically improves the quality of life. It must beremembered that in exploiting energy resources in anirrational fashion we can deleteriously affect otherparameters, such as the environment, and actuallyworsen the quality of life. Thus governments, in formulat-ing energy policy, must seriously consider the socialeffects energy policies will produce.

A good energy policy should strive to ensure thatplentiful, affordable energy is available so that thenecessities of life can be guaranteed for all. It should atleast endeavour to ensure maintenance of presentstandards of living and it should offer the hope of aneven more prosperous future. It must not create unem-ployment; on the contrary, it should generate jobs andbring people to a greater awareness of how energyaffects and, in many ways, controls their lives.

In recent years a new concept has been introducedinto the energy debate. This philosophy attempts to dealwith energy by concentrating on demand and in sodoing divides energy options into two basically differentapproaches, called "soft" and "hard" energy paths.Soft energy paths are seen as those which restraindemand and enable a society to be based totally orprimarily on renewable forms of energy and decentral-ized sources of supply. A major commitment to conser-vation is thus an integral part of the soft energy optionsince demand must not rise beyond a level which renew-able energy sources can handle. All other approaches toenergy policy which deal primarily with energy supply,and which presuppose large centralized facilities, arecalled hard energy paths.

The Committee feels that such an arbitrary divisionof energy policy options is unnecessary. In fact, it can

69

confuse the issue by making the general public feel thatwe are in an either/or situation — one must choose oneroute or the other in a mutually exclusive fashion. Webelieve that Canada is going to need a range of optionsextending from small, decentralized renewable energysources to large, centralized sources of supply to meetdemand. We further believe that conservation should bea cornerstone of any energy policy, regardless of wheth-er that policy is described by some as soft or hard. Nomatter what our future sources of supply will be, in theshort run conservation is the first priority in addressingthe energy problems we face.

In terms of renewable energy sources, we do notyet know enough about each of them to be able toconclude definitively how much energy each will be ableto supply. For example, it is difficult to assess whatsocial ramifications a headlong plunge into large-scaleuse of biorrass energy would have and therefore wecannot accurately assess how much energy this alterna-tive source could realistically provide. Similarly, there arestil' a number of questions about what the effects oflaige-scale solar energy use would be — what are thematerial, energy and space requirements for a largernmber of solar installations — so we do not know howmuch energy solar will ultimately supply.

We believe that before any government can decideon the individual roles alternative energy sources andtechnologies can play, a great deal of research anddeveicoment must still be done to answer questionssuch as those described above. This Committee believesthat more RO&D in alternative energy sources and tech-nologies should be proceeded with immediately — notbecause we advocate either a soft or a hard energyfuture, but rather because we see an urgent necessityfor gaining greater insight into the options Canadashould develop in the future.

Undoubtedly, one great step towards making thiscountry more energy responsible will be to make every-one conscious of the amount of energy he or sheconsumes, how this energy was exploited and what theactual economic, social and environmental costs of itsuse are. And, since the Committee feels conservation isone of the most important aspects of an alternativeenergy policy, it is essential that the public becomemuch more energy-aware. This can be done by increas-ing efforts to educate people about how and how not touse energy, and by giving people a "hands-on" feelingfor energy — which can be illustrated by the followingexample. In apartment buildings which have a flat ratefor tenants' electrical consumption there is no incentiveto turn off lights and electrical appliances when they arenot in use. However, when individual metering is installedin multi-unit buildings, overall electrical consumptiondrops because individuals can see the benefits of con-servation reflected in lower electricity bills. Innovations

which generate this kind of feedback about the conse-quences of our daily energy decisions are required tohelp us adjust to using energy more wisely.

Thus, implicit in the energy Mure envisioned by theCommittee is the understanding that Canadians will findit necessary to modify their habits in ways which allowthem to consume less energy. Fortunately this type ofchange already seems to be taking place to someextent. Thousands are switching to smaller cars, peopleare turning down thermostats, homes are being betterbuilt, and there is a return to living in the core of cities.This trend will undoubtedly continue and broaden in thefuture and, as present values change, smallness andenergy efficiency will become the new status symbols.

This trend bodes well for the future because itmeans citizens are changing habits in a direction whichis characterized by decreased energy consumption andheightened environmental awareness. Social develop-ments of this kind are encouraging because they areamongst the prime goals the Committee wishes tofoster. Conservation practices and the decentralizedproduction of energy inherent in an expanded exploita-tion of renewables should allow Canadians to furtherdevelop a "hands-on" feeling for their energy consump-tion.

As the rate of growth in per capita energy con-sumption in this country declines and the use of alterna-tive energy sources increases, the rate at which largepower-generating establishments have to be construct-ed will diminish. Those large establishments which arerequired, however, will keep the generation of someenergy localized and the benefits to be gained from suchinstallations, particularly the ability to more easily controlemissions from a centralized source, will help provide acleaner environment. In other words, a mixture of whathave been describe 1 as soft and hard energy options,coupled with accelerated programs of public informa-tion, should permit people to become more intimatelyinvolved with and aware of how they use energy: In ouropinion, this should lead to a better quality of life.

We realize that the transition from a fossil fuel to arenewables-based economy will impose its hardships onenergy consumers. Although most Canadians will ben-efit from increases in secure energy supplies, a greaterdiversity in energy supply sources, new growth in energysupply and related industries and improved economy-wide energy efficiency, some Canadians may findincreases in energy prices difficult to contend with.Nevertheless, it should be remembered that even todaywe all pay the cost of subsidizing energy use. Theindirect nature of these costs often deludes us intothinking that they do not exist and that they never willhave to be paid, so no wonder the prospect of paying

70

THE ENERGY SYSTEM TOMORROW

extra for each barrel of oil is distasteful. But the Commit-tee recognizes that price increases will take place andthat higher energy costs are inevitable.

In Canada today, oil prices are not based upon thecost of production alone but are regulated at a levelbelow the international price. Energy consumers arethus protected both from high world prices and fromsudden changes in those prices. Since the pricing ofother energy commodities is linked, either directly orindirectly, to that of oil, Canada's energy system as awhole is governed by politically-determined oil pricingdecisions. As the international price increases and asthe domestic price rises towards it, as intended inpresent policy, the prices of other energy forms will alsoincrease.

Along with the direct effect of higher energy priceson budgets, there will be inflationary impacts as theseprices work themselves through the entire economy,raising the cost of living for all Canadians. ThoseCanadians who cannot adjust to the reduction in theirdisposable income that will come about because ofhigher energy costs will have to be protected. Theshotgun approach to subsidizing lower-income Canadi-ans through regulated oil prices is considered unwise bysome, though, not only because this promotes the con-sumption of oil, which is perverse under present circum-stances, but because it gives all oil consumers a subsi-dized ride. The point is made that higher energy pricesare not the only cause of poverty and it is unreasonableto expect energy price regulation to improve or signifi-cantly worsen this perennial social problem. Other toolsthan price regulation exist for redistributing income.

In the transition to more expensive energy, thosewho are recognized as having difficulty coping withincreased prices should be aided directly through theexisting system of income supplements. This subsidiza-tion should receive a high priority. In addition, there areother benefits associated with providing income supple-ments for those hit hardest by higher costs — for one,by having more income to spend, those who are subsi-dized can invest in energy efficiency rather than in moreenergy consumption.

The promotion of some forms of alternative energywill have a pronounced and universal social effect if thatpolicy brings about increases in food prices — theso-called "food versus fuel" controversy. Any futureenergy program which utilizes agricultural or foodbiomass for the production of alternative energy, if it isto replace a significant proportion of the petroleumcurrently being used, will necessarily require a largeamount of land and other resources normally needed inagriculture and silviculture. This is a primary social con-cern in a world where food production is already insuffi-cient, for a variety of reasons, to meet global demand.

This concern has both domestic and internationalimplications:

• Further pressure on land prices, which have alreadyundergone large increases in recent years (especiallyin the rural-urban interface), would be undesirable.

• Shifts in production between food crops and fuelcrops in response to rapidly changing input costs,demand and profitability could destabilize agriculturalprices and incomes. This would be undesirable fromthe point of view of producers and consumers whohave been working toward greater stability in the foodsystem.

• People who suggest that land should be reserved foragricultural purposes point out that there are alreadylarge segments of the human family which are under-or malnourished. They feel it is morally indefensible forman to utilize valuable agricultural land to grow cropsto produce energy which will be consumed by arelatively small, and already well-fed, segment of thepopulation. Despite the maturation of the "GreenRevolution" in some parts of the developing world,foodstuffs produced in Canada provide an importantsource of supplementary food in certain world mar-kets. Our food production relieves pressure on grainmarkets and contributes to a moderation in whatotherwise might be prohibitively high prices in time ofgrain shortages. Cellulosic feedstocks such as hybridpoplar seem far more attractive than agricultural food-stuffs as energy crops because they can be grown onnon-food-producing land and will thus not necessarilybe in direct competition with food crops for prime soil.This would have to be carefully monitored though asenergy crops that were profitable on rough or margin-al land (Classes 4 to 7 of the Canada Land Inventory,Agricultural Land Classification System) could beeven more profitable on higher quality land, whichmight be nearer energy markets and already servedby transportation systems. Legislation might berequired to prevent energy feedstock crops from dis-placing agricultural crops.

• The disparity between the "have" and "have-not"nations may be exacerbated if there is a global shifttowards using biofuels. Underdeveloped countriesmay try to produce such fuels domestically, thuspossibly taking food commodities out of productionand hence out of international trade. Furthermore, ifthey try to cultivate energy crops for exportation in adesperate attempt to gain hard currency, this couldlead to an increase in the already unacceptable ratesof global deforestation and desertification (thespreading of deserts).

At the present time, there is much argumentamongst scientists and energy analysts over whetherthere is a net energy gain in producing energy products

71

such as ethanol from crops. In brief, approximately thesame amount of energy is required to grow the cropsand convert them to ethanol as is contained in theethanol itself. But surely this is begging the question; ifone has a great deal of difficulty in determining whethera process produces any net energy at all, it is obviouslynot an alternative which holds much promise for solvingenergy problems. There is, however, no question aboutthe net energy balance involved in the "fuel" peopleuse; food is essential for survival.

These arguments are countered by those who saythe protein content of food crops is not consumed ordamaged during fermentation and that developing newand marginal lands for energy crop production mayactually increase the world's net amount of disposableprotein. Furthermore, they state that this is more to thepoint since the world is starved of protein, not carbohy-drate. The argument sounds convincing — at first —but further thought raises some serious doubts. Thisscenario would probably not, in fact, ever come aboutbecause the protein-containing dry distiller's grains pro-duced during fermentation will almost certainly be usedfor animal feed in the developed countries producingethanol. In fact, it is unlikely the protein would everreach those peoples who desperately require it, at leastnot as long as the developed world continues to demanda large quantity of animal protein in its diet.

It appears that regardless of how attractive thebiomass energy route appears to some, producing

energy products from food crops on a broad scale willalmost certainly lead to increased prices for agriculturalproducts and to world shortages of food. It will probablynever do a great deal to mitigate the oil crisis the worldis caught up in now, and it will almost certainly exacer-bate the food crisis the world is sure to experience in anot-too-distant tomorrow. Energy can be derived from avariety of sources and can be distributed and consumedin the form of a variety of energy currencies. The ques-tion thus arises: Why use the food resource, which isessential for one purpose — namely providing suste-nance for the human race — for a purpose such asproviding energy, when there are alternatives for thelatter? One aim of proper resource management shouldalways be to fit the resource to the end-use required.This basic principle may be violated in turning foodcrops into energy crops.

On the other hand, energy from cellulosic biomass,particularly wood, is an attractive alternative energyopportunity in Canada and seems well-suited to makinga significant contribution to energy supplies. This is whyin Alternative Energy Sources, Currencies and Technolo-gies the Committee recommends that Canada developmethanol from cellulosic biomass rather than ethanolfrom food crops, for use as a fuel in the transportationsector. (The promise of producing ethanol from celluloseis also attractive but this process requires further R&D atthe present time.)

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Electricity and Hydrogenin Canada's Energy Future

T here are two energy currencies which can bederived from all the alternative energy sources

which we have considered. They are electricity andhydrogen. We see these two currencies dominatingCanada's energy mix in the long term because theysatisfy our criteria for determining the direction a newenergy policy should take.

• Consideration number one was that conservationshould be encouraged. This should be done no matterwhat the energy mix and simply means that energyshould be used judiciously and efficiently.

• The second principle stated that energy should bederived from renewable and/or inexhaustible energysources. Wind, geothermal, hydro, tidal, biomass,solar and nuclear energv " satisfy these criteria.(Living organisms and biomin.etic systems — systemswhich mimic the chemical reactions of livingorganisms — may also be developed which canevolve hydrogen.)

• Third, all of the energy sources named (with theexception of nuclear, the environmental hazards ofwhich have not yet been determined to our satisfac-tion) are relatively environmentally benign, as are thecurrencies produced (hydrogen and electricity) and asare the "combustion" products of these currencies(water and low-quality heat).

• Fourth, the variety of sources, diversity of productionmethods, options for storage and transportation, andspectrum of end uses possible for these energy cur-rencies allow development of a system which willindeed be very flexible. (Another consideration worthnoting in this connection is that electricity and hydro-gen are interconvertible using electrolysis or fuel cells,further increasing the flexibility of this energy system.)

• Fifth, the resources required to produce hydrogen andelectricity are plentiful in Canada, giving us the poten-tial to become completely energy self-sufficient, there-by eliminating strategic concerns.

• Sixth, the flexibility of this system coupled with thewide variety of potential energy sources throughoutthe country ensure that Canada can achieve regionaldiversity in energy supply and demand management.

• Seventh, the facts that a hydrogen-electric energysystem would be less polluting than our presentsystem, that this mix would create employment acrossthe whole country and that such a system wouldgenerate technological and economic spinoffs throughthe export of new Canadian technology abroad areexcellent social benefits.

The flexibility of a 'hydrogen-electric system isindicated diagramatically in Figure 4-6, which indicatesvarious possibilities for hydrogen production and use inan industrial society.

For a considerable time to come, oil will continue toplay an important role in our energy mix since wealready have the infrastructure for its production, distri-bution and use in place and because it is the source of abroad range of convenient fuels. Although Canada islacking large reserves of light crude oil, our nation doeshave oil sands in abundance. Thus one way we willcontinue to meet our unavoidable requirements forpetroleum products is through converting our heavycrudes into light oils by adding hydrogen. (The additionof hydrogen increases the hydrogen/carbon ratio ofheavy oils, changing them into light oils.) Today thehydrogen required for this process is typically obtainedby stripping it from the methane (CH4) molecule, themain constituent of natural gas. But this practice isclearly wasteful of hydrocarbon resources and webelieve that hydrogen produced by electrolysis (splittingof water into hydrogen and oxygen by means of anelectrical current) should be used in the future toupgrade heavy oils. In this connection we have anabundance of sites for both small- and large-scalehydro-electric developments in Canada and even remotesites now considered uneconomic could be harnessed togenerate electricity which could in turn be used toproduce hydrogen.

We have observed the increasing requirement forenergy in Canada's energy supply industries — ournation requires progressively more energy to extendconventional energy supplies. This suggests thatCanada needs to be more innovative in approaching thesupply problem. For example, Canadian utilities willbuild more thermal-electric generating stations endthese stations, bound by the laws of thermodynamics.

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Figure 4-6: HYDROGEN: AN ENERGY CURRENCY FOR THE FUTURE

will produce little more than one unit of electricity foreach three units of heat input. Locating one or morepowerplants over oil sands deposits that can only beexploited with in situ recovery techniques would offer thefollowing advantages: the rejected thermal energy fromthe powerpfant could be utilized in heating the oil sandunderground to allow heavy oil production, and theelectric power could be employed to electrolyze waterfor hydrogenating the heavy oil produced. By connect-ing the powerplant/oil sands facility to the regionalelectric grid and to the gas distribution system, energybalances for the operation could be maintained withsurplus electricity used elsewhere and surplus hydrogenblended with the regular gas supply.

Connecting the production of electrolytic hydrogenfrom remote hydro-electric sites or from on-site thermal-electric stations to Canada's fossil fuel resourcesaccomplishes several goals: our supplies of oil areextended to allow time for the transition to newer energysources to occur smoothly; in augmenting our domesticsupply of light crude we improve our strategic positionvis-a-vis oil imports; we conserve natural gas for directuse as an energy source; we acquire experience ingenerating, transporting and using hydrogen; and we

develop a hydrogen infrastructure which will allow us touse this energy currency increasingly as we move offhydrocarbons. Nonetheless, the reader should bear inmind that this discussion does not address the liquidfuels problem of the 1980s; it is an approach for themedium term and longer. Elsewhere in the Report weexamine Canada's difficulties in the coming decade.

Electrolytic hydrogen can also be coupled with theproduction of alcoho! fuels from biomass as Canadashifts from an oil-based system — by "spiking" synthe-sis gas produced from biomass or peat with pure hydro-gen it is possible to significantly increase the yield ofmethanol from a given amount of biomass (see thesections on Biomass and Hydrogen).

As shown in Figure 4-6, hydrogen produced from anumber of non-fossil fuel sources can also be used toextend our reserves of natural gas. Up to 20% hydrogencan be added to natural gas without requiring anychanges in pumping facilities and furnaces, boilers orappliances that now burn natural gas. The fact that theFederal Government intends to extend the natural gasdistribution system through Quebec to the MaritimeProvinces means that supplies of natural gas across thecountry could be augmented by hydrogen. Such a gas

74

THE ENERGY SYSTEM TOMORROW

STORAGE AND TRANSPORTATION

o a

blending scheme would also contribute towards buildingup our hydrogen-producing capability to parallel adecline in the use of hydrocarbons. Eventually the equip-ment now carrying and burning natural gas could beconverted to utilize pure hydrogen. For environmentalreasons, we recommend that the switch to hydrogenoccur as quickly as feasible as use of this energycurrency would help alleviate the buildup of COj. in theatmosphere and help reduce acid rain. Hydrocarbonswill be used for decades to come but in diminishingamounts as fuels so that supplies should be sufficient tomeet petrochemical and other non-energy demands forthe indefinite future.

Canada's hydraulic resources and solar, wind, tidal,geoihermal and nuclear energy all fit into a hydrogen/electricity-based energy system. They do not all fit in inthe same fashion though. Solar and geothermal energy,which in this country hold their greatest promise forproviding space and process heat, will conserve elec-tricity for such applications as hydrogen production.Conservation and good energy management will accom-plish the same end. Wind turbines provide high-qualityenergy but will be limited to regional use in Canada, aswill any exploitation of tidal energy. At least in the

Province cf Ontario, where nuclear energy already pro-vides one-third of the electricity, a hydrogen system willinclude a larg nuclear input. Other parts of the nationmay find the development of more remote hydraulicsites to be the best way to proceed. The great advan-tage offered by an electricity-hydrogen system is that itcan accommodate a range of supply options andregional approaches without the need to change thedistribution and end-use infrastructure.

So far the only method of hydrogen productionwhich has been discussed is electrolysis. The Committeefeels that given the fact that our present and futurealternative energy supply options can all be used toproduce electricity, and hence hydrogen, electrolysisshould and will eventually be the production method ofchoice in this country. It is also possible to split waterand produce hydrogen by the direct application of heat,but only when nuclear fusion reactors with their charac-teristic high temperatures become available will societybe able to achieve this reaction — this option is a verylong-term one. Nuclear fission reactors and concentrat-ed solar energy may provide temperatures in the rangerequired for thermochemical hydrogen production, andphotochemical reactions (chemical reactions induced by

75

sunlight) may also offer some potential for hydrogenproduction. One method which is used in Canada todayto produce hydrogen is the steam reformation or partialoxidation of crude oil. The latter method is not part ofthis Committee's view of our future hydrogen energysystem, however, as it is not compatible with the goal ofmoving away from the use of hydrocarbons as futureenergy sources.

Hydrogen can be stored in several ways and isversatile in its end uses. It can be kept as a super-coldliquid or under high pressure as a gas. Both of theseforms of hydrogen can then be transported by truck totheir point of end use. When larger quantities areinvolved, it can also be stored in underground cavities.For portable applications where weight is not a problem,hydrogen can be stored in chemical combination as ametal hydride or liquid hydride. The details of thesestorage methods are presented in the Hydrogen sectionof this Report.

If hydrogen is to replace oil it must be applicable tothe same sectors of our energy economy. In this respecthydrogen appears to be an excellent fuel option. Asdepicted in Figure 4-6, liquid hydrogen can be used asan aircraft fuel. This application will require some modifi-cation to current aircraft but the high energy-to-weightratio of liquid hydrogen makes it an attractive option.Work is already underway to demonstrate this technolo-gy and it may become one of the early applications forhydrogen, along with the fossil fuel resource extensionalready noted. Liquid hydrogen is also adaptable to shippropulsion and holds promise for use in groundtransportation.

As a metal hydride, hydrogen can be stored for usein buses and probably in trains as well. In fact, a numberof hydrogen-powered buses are already operating in theUnited States and West Germany. Hydrogen gas storedin high-pressure containers is already used in industrialapplications, but the real changes in energy use con-

nected with an evolving hydrogen energy system will bein the gradual replacement of natural gas and naturalgas-hydrogen blends by pure hydrogen, delivered bypipeline. Hydrogen can replace natural gas in manyindustrial applications as a boiler fuel, for hydrogenationprocesses, for the production of fertilizers and so on. Inthe home, hydrogen can be used to fuel appliances andfor providing heat. This useful element can also beemployed in the production of a number of syntheticfuels, as already noted, and methanol from biomassfeedstock.

Another attribute which makes hydrogen an attrac-tive fuel is the fact that it is clean-burning. The onlyproduct of the combustion of pure hydrogen in air iswater vapour. In large cities where air pollution causedby petroleum-fueled ground transportation is a majorproblem, hydrogen offers a handy solution. Hydrogen inthe form of a metal hydride or a liquid hydride such asmethanol can be stored on a bus or a commuter train.When propulsion is required the hydrogen is evolvedfrom the hydride and combined with air in a fuel cell toproduce electricity which in turn runs an electric motor.(Conventional gasoline engines can also be adapted toburn hydrogen.) In cities, large fuel cells which will runon hydrogen and air can be installed to allow electricalgeneration near the point of consumption without the airpollution problems usually attendant with utilities gene-rating electricity from fossil fuels (see section on FuelCells).

The speed with which an energy system based onhydrogen and electricity evolves will depend on anumber of factors, not the least of which will be thepolitical commitment to make it happen. Given theversatility of this energy source and the lack of environ-mental pollution engendered in its end use, the Commit-tee strongly recommends that Canadian energy policy-makers adopt this energy system as their long-termobjective and begin now to move Canada in thatdirection.

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Future Transportation Fuels

W e have considered what a hydrogen-electricenergy system would look like in a very general

way. But what about the specific case of the transporta-tion sector? Transportation accounts for about 50 percent of the petroleum we use and it has been stated onnumerous occasions that the energy problem in Canadaderives in large part from our need for portable transpor-tation fuels. This question and specific options are dealtwith in some detail in the Biomass, Hydrogen and Non-conventional Propulsion sections but. in summary, theCommittee sees a variety of transport fuels coming onover the next two decades to carry us to the time whenhydrogen and electricity will dominate.

Gasoline-powered internal combustion engines willcontinue to power a substantial but diminishing propor-tion of vehicles up to the year 2000 and beyond (Rgure

4-7). They will be smaller and more fuel-efficient buttheir numbers will have to decline if we are to achievethe goal of getting off oil as an energy source. Somevehicles running on propane and compressed naturalgas (CNG) are on the road today and we see theirnumbers increasing substantially. Most use of thesealternative fuels will probably be made in fleets as thereare problems in fuel distribution and with the drivingrange in such vehicles. Propane use may dwindletowards the year 2000 as supplies of this fuel are limitedand we therefore see its application in a transitionalstrategy only. CNG vehicles could be used well past theyear 2000 if the decision to do so is made by virtue ofthe fact Canada is rich in natural gas supplies. However,we do not advocate the very long-term use of thishydrocarbon in the transportation sector.

Rgure 4-7: PROPELLING OURSELVES INTO THE FUTURE

Today

CompressedNatural Gas

(GN6)Propane^

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Competitive electric cars may become available asearly as 1985 but we do not see electric vehicles con-tributing significantly to Canadian transportation before1990 to 1995. After this time electric vehicles shouldbecome increasingly common as we enter the electric-hydrogen age. We would also urge that careful consider-ation be given to electrifying elements of Canada's railtransport system.

Hydrogen-powered vehicles may take somewhatlonger to come on-stream as a great deal of work muststill be done to make hydrogen vehicles a competitivealternative. We do, however, see them having someslight impact as early as 1990 (perhaps in the form ofmodified internal combustion engines burning hydrogen)with broad penetration, possibly in the form of fuel-cell-powered cars, occurring only around the turn of thecentury.

Fuel alcohols (ethanol used primarily in gasolineblends and methanol primarily used straight) may have asignificant impact on the transportation sector.Methanol cars and the fuel they require could be madeavailable as early as 1985 and if a major commitment ismade to go with methanol, this alcohol could become avery important player in the transition to the hydrogenand electric future we have described.

Since methanol can be derived from renewableenergy sources such as biomass and since methanol isessentially a liquid hydride (hydrogen carrier), it couldcontinue to play an important role in road transport forthe indefinite future. (It is also interesting to note thatmethanol can be synthesized from CO2 and hydrogen.Thus this currency fits in well to a hydrogen economyand provides a means of converting waste C02 into autilizable energy commodity. This process would not,however, reduce the concentration of carbon dioxide inthe atmosphere.)

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Building a Hydrogenand Electric Economy

T aken together, the recommendations contained inthis Report constitute a fundamental reshaping of

Canada's energy system. Although our proposals spanmuch of the field of alternative energy, there are fourareas in which we believe primary emphasis should belaid.

First, an intensified effort in energy conservation isrequired without delay, especially as this is the fastestand least expensive approach to minimizing Canada'spetroleum shortfall in the 1980s. Second, solar energy isa large and promising resource and we are recommend-ing expanded activity in most aspects of solar research,development, demonstration and commercialization. Inthe next century, solar energy will be an importantelement in Canada's energy mix, particularly in theprovision of lower-quality heat. Third, methanol shouldbecome a major player in Canada's energy futurebecause of its attractiveness in the transportationsector. It can extend, and preferably substitute for,gasoline—a desirable goal in itself—while at the sametime opening up the use of Canada's biomassresources. Fourth, we see hydrogen and electricity intandem (the two being interconvertible via electrolysisand fuel cells) becoming the dominant energy currenciesin this country in the long term.

If our recommendations are to be acted upon, weconsider it essential that some vehicle be created tocoordinate and promote the various activities to beundertaken. We have decided that the first three areasof emphasis named above should become the responsi-bility of a new Ministry of State.

RECOMMENDATIONThe Committee recommends that a Ministry ofState for Alternative Energy and Conservationbe created under the Ministry of Energy, Minesand Resources. We further recommend that this

new Ministry be divided into four sectionsresponsible for Conservation, Solar Energy,Methanol, and Other Alternatives.

The fourth area of concentration, dealing withhydrogen, we believe should be coordinated by a newlead agency entitled Hydrogen Canada, as described inthe Hydrogen section of the chapter on AlternativeEnergy Sources, Currencies and Technologies. Thisagency should have prime responsibility for fostering thedevelopment of a hydrogen-based energy system in thiscountry and should report directly to the proposedMinister of State, as is recommended in the Hydrogensection of our Report.

The Committee also believes that the proposedMinistry should oversee most aspects of renewableenergy and conservation developments in Canada. Thisincludes the efforts to commercialize new energy formsand technologies.

RECOMMENDATIONThe Committee recommends that the new alter-native energy corporation, Canertech, report tothe proposed Minister of State for AlternativeEnergy and Conservation at the time that itbecomes an independent Crown corporation.

By gathering together much of the responsibility forpromoting alternative energy and conservation into oneMinistry, the Committee expects that more consistentand effective development of these elements of Cana-da's energy system will result. We consider this restruc-turing necessary because of the inconsistent and inade-quate manner in which alternative energy RD&D hasbeen supported in the past and because insufficientemphasis has been placed upon commercializing theresults of Canadian energy research.

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Introduction

E conomic considerations underlie nearly all majordecisions made by governments and

individuals — economics to a very large extent deter-mines how we assess communal and personal priorities.A definitive study of the relationship between all energysources and the economy requires an analysis wellbeyond the scope of our mandate, but we would like todeclare at the outset that a clearer understanding of thismatter is essential in this country. We found the state ofeconomic analysis in the alternative energy field in par-ticular to be lacking in many respects, with existing workoften being inconclusive and contradictory. More studyis clearly necessary.

RECOMMENDATION

The Committee recommends that the Depart-ment of Energy, Mines and Resources initiate acomprehensive study of energy and the econo-my to clarify this important relationship in theCanadian context and to provide guidance informulating energy policy and more generaleconomic policy.

Having said this, the Committee did receive input onthe effects which the introduction of alternative energymay have on Canada's economy. This input, and otherinformation which was available, contributed to the de-velopment of the ideas presented here. This chapterdeals with the complicated issue of energy supply anddemand in an economic context and brings together arange of ideas which we have not seen collectivelydiscussed elsewhere.

With Canada's plentiful natural resources, highlyeducated and skilled labour force and extensive capitalbase, one might conclude that Canadians should neverhave to worry about shortages of anything. At any giventime though, only certain combinations of goods andservices can be produced with available resources andexisting technologies.

What lies at the root of all economic purchasing andproduction decisions is price — the allocative mech-anism in our economy. For this reason, energy pricing isthe central issue in energy supply and demand.Although from the perspective of the economy as a

whole the production and supply of alternatives to fossilfuels may make sense (that is, the social costs of thealternatives may be lower than the social costs of fossilfuels), these alternatives will only find acceptance in themarketplace if the price at which they are available iscompetitive with fossil fuel prices. This problem tran-scends the peculiar characteristics of each new energyform and emphasizes instead the total role of energy inthe economy.

Today, most alternatives to conventional energysources are still being developed. Their economic viabili-ty remains to be demonstrated: proponents producefavourable cost estimates for various alternatives andskeptics emphasize their inadequacies. Indeed, as alter-natives have yet to carve a significant niche in themarketplace, one may conclude that they are demon-strably not competitive. But this conclusion would betoo simplistic. For one thing, conventional energy inCanada is priced below world levels, making many ofthe alternatives discussed in this Report less competi-tive. However, Canada's energy situation is constantlychanging: prices have risen over the past decade andwhat is noncompetitive at today's prices may well becompetitive at tomorrow's prices. And, with the rightincentives and successful research, technological break-throughs may render certain options much more attrac-tive than they appear today.

The problem is that prior to commercialization it ishard to tell the sure bets from the dead losses. Given thecomplexity and fluidity of the economy, feasibility stud-ies will not always give the right answers. To illustrate,an analysis may conclude that producing methanol fromhybrid poplar plantations on marginal farmland iseconomically feasible at today's prices. The activity ofproducing the feedstock may, however, force up thevalue of the land and consequently the cost of produc-ing methanol. Furthermore, if the cash value of energycrops were perceived to be greater than that of conven-tional agricultural crops, farmers might convert primeland to energy production, leading to increased foodprices and indirectly making methanol appear lessattractive. Put another way. economic factors changeand most would agree that hindsight leaves somethingto be desired as an approach to economic planning.

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In order to appreciate the role that alternatives and it influences growth, the balance of international pay-conservation will play in Canada's energy future, it is ments and employment. The last section provides theimportant to understand the general function of energy philosophical underpinnings for economically wise alter-in the economy. Therefore this chapter is devoted to a native energy incentives,discussion of how energy fits into the economy and how

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Energy Pricing

Although the price of energy is not the only factoraffecting alternative energy supply and demand,

pricing considerations are crucial to understanding theeconomic problems associated with introduoing alterna-tive energy forms and technologies. In this section wereview the recent history of energy pricing in Canadaand consider the implications of a range of future prices.

1. ENERGY PRICING IN THE PAST

In today's complicated world the price of energy isdetermined by factors which go far beyond simple con-siderations of supply and demand. In addition to thesignals of the marketplace, policies and programs offoreign countries as well as those of the CanadianFederal and Provincial Governments determine the priceof energy in this country. Since 1973, the overwhelmingexternal factor has been the Organization of PetroleumExporting Countries (OPEC) which, through supply re-strictions and price setting, has increased the cost of oiltwenty-fold on the world market within ten years.

In the 1940s, prior to the widespread developmentof petroleum resources in the Canadian West, the UnitedStates was this country's main supplier of oil. This oilwas priced on a "Gulf Plus" basis — the price of oil atthe Gulf of Mexico plus the cost of transportation toCanadian markets. During the 1950s, the price of oil inCanada was determined in the Chicago-Sarnia interfacemarket, which meant that Western Canadian oil flowingto the Central Canadian market had to compete with theAmerican supply on a Chicago price basis.

Restructuring of the Canadian petroleum marketoccurred in the early sixties. The Borden Commission onEnergy (1958-59) recommended an east-west split in oilmarkets to foster development of Canada's petroleumindustry. The National Oil Policy legislation of 1961created the "Ottawa Valley Line" with markets west ofthe line supplied by domestic producers and east of theline supplied by imports. This meant that during the1960s Eastern Canada was able to take advantage oflow world prices ($US 1.80 f.o.b. per barrel for SaudiArabian light crude throughout the decade) while thewestern market, including Ontario, paid a domestic pricewhich was on average 25<t-50<t per barrel higher.

By 1973, Canadian oil prices were again similar toU.S. prices and continued to rise in response to OPECprice adjustments until, on 4 September 1973, the Na-tional Energy Board recommended a freeze to protectCanadians from the inflationary impact of risingpetroleum costs. In the fourth quarter of 1973 the worldpetroleum market began to change rapidly. OPEC priceincreases during, and in the aftermath of, the Arab-Isra-eli war of that October were such that by January of1974 the world price of oil had climbed to $US 11.65.

To cushion Canada's economy from this shock, theFederal Government agreed to compensate oil importersfor the difference between a pegged domestic price andthe imported oil price, through an import compensationprogram. On 1 April 1974, a federal-provincial agree-ment established a single domestic price of $6.50 perbarrel. A new Federal oil export charge, equal to thedifference between the world and domestic prices, wasimposed on Canada's oil exports. Periodic increases inwellhead price occurred after 1974 and. on 1 January1978, the Canadian wellhead price stood at $11.75. Anew arrangement was reached in February 1978 be-tween the Alberta and Federal Governments whichestablished increases of $2.00 per barrel each year.That agreement terminated in July of 1980 with theFederal Government allowing a further $2.00 per barrelincrease on 1 August 1980. The National Energy Pro-gram 1980 of 28 October 1980 provided for a 1 January1981 wellhead price increase of $1.00 per barrel, bring-ing it to $17.75. A further $1.00 increase on 1 July willresult in a 1981 average domestic price of $18.25 perbarrel.

Canadian and world petroleum prices since 1970are shown in current dollars in Figure 5-1. By the end of1980, Canada was paying almost $Can 40 per barrel toimport crude oil. In real or constant (1973) dollars, theworld price of crude oil has increased five-fold since1973 (Figure 5-2). In contrast, the Canadian wellheadprice in real terms has not quite tripled over the sameperiod. The increasing gap between the real import anddomestic prices demonstrates that Canada has not keptpace with increases in world price over the 1973 to 1980period. Thus the economic incentive (in the form ofhigher oil prices) to conserve energy and to introduce

85

8

Figure 5-1: IMPORTED AND DOMESTIC OIL PRICES SINCE 1970,IN CURRENT CANADIAN DOLLARS PER BARREL

Figure 5-2: IMPORTED AND DOMESTIC OIL PRICES SINCE 1970,IN CONSTANT 1973 CANADIAN DOLLARS PERBARREL

DOMESTIC OIL PR CE

1970 71 72 73 74 75 76 77 78 79 80YEAR

1970 71 72 73 74 75 76 77 78 79 80YEAR

Note: The imported price is the average annual (quarterly in 1980) cost of foreign crude oil landed at Montreal. The domestic price is the average annual (quarterly in 1980)cost of Alberta crude oil delivered to Toronto.

Source: After Canadian Enerdata, 1980.

ENERGY AND THE ECONOMY

energy alternatives is increasing more rapidly in otherindustrialized nations where price inci eases have beenkeeping up with those in the international market. Ifeconomic incentives continue to favour conventionalfuels and energy services, this will work to slow down theintroduction of energy alternatives in the Canadianenergy system. The strategy laid out in The NationalEnergy Program 1980 indicates, however, that govern-ment policy is now somewhat less concerned with pro-tecting oil consumers and more with establishing Cana-da's petroleum self-sufficiency.

The real price of gasoline (in constant 1971dollars) — which is a composite of wellhead price,transportation charges, refining and marketing costs,and federal and provincial taxes — declined in thepostwar period until 1973, then stayed relatively stableuntil the late 1970s, and is now increasing (Figure 5-3).We pay about the same price for gasoline today as in1955, in constant dollar terms. Anyone now driving amore efficient car about the same number of miles asthen may actually be spending a smaller share of hisincome on gasoline.

Despite the fact that Canada's reserves of naturalgas increased in the 1970s, in contrast to oil, the priceof gas has been increasing in step with that of oil. Thishas been the result of a policy decision in recent yearsto keep the price of natural gas at about 80% that of oilon an energy equivalent basis, as is indicated in Table5-1.

The price of electricity in Canada has been rising inrecent years as a result of higher rates of inflation andthe dramatic rise in the cost of petroleum used forthermal-electric generation. The increased cost of bor-rowing funds for utility construction has also been ofparticular significance.

Prior to 1972, electricity prices were relativelystable in Canada (1.1<t to 2.3(t per kWh). Between 1973and 1978, however, fuel costs per kilowatthour of elec-tricity produced in fossil-fuel generation tripled. In thelast several years, the overall rate of increase in electrici-ty prices has been less than that of the cost of living ingeneral and has been moderate compared to the EnergyPrice Index.

Electricity pricing has undergone extensive study inthe past half decade. Electrical utilities generally havefollowed a practice of granting reduced rates to bulkpower purchasers. Some have questioned this pricingarrangement, partly because it tends to discouragemore efficient use of electricity. This and other aspectsof electricity pricing were studied by the Ontario EnergyBoard between 1977 and 1979. The Board concludedthat Ontario Hydro should continue to price electricity soas to cover accounting costs of operation. A pricingsystem has also been proposed whereby customers arecharged less during those hours of the day in which

Figure 5-3: THE PRICE OF REGULAR LEADEDMOTOR GASOLINE IN CANADASINCE 1949

1.40

1.20-

| 100-

C3

I -80Ui

S

§ .60in

S .40

.20

- CONSTANT (1971) DOLLAR PRICE

CURREM"DOLLAR PRICE

10

•5

1950 1955 1960 1965 1970 1975 1980

Sourcer Canada, Department of Energy, Mines andResources, 1979b. p. 9; and personal com-munication. EMR, 1981.

Table

Date

19701971197219731974197519761977197819791980

5-1: COMPARISON OF CRUDE OIL ANDNATURAL GAS PRICES — ANNUALAVERAGE

EasternCanada

GasPrice

($/Mcf)

0.430.430.480.490.590.881.331.581.902.062.42

"> $1 per Mcf = $5.80 per barrel.

Source: Canada, Department of Energy,Resources. 1980e. p. 32.

Gas Priceas a

Percentageof Oil<al

(%)

7570776752648383838180

Mines and

87

demand is low and more at times when demand is high(such as late afternoon). Such a system (similar to BellCanada's rate structure) would encourage a more evenuse of generating capacity and reduce the requirementfor generating equipment to meet peak power demands.Reconsideration of electricity pricing practices is likely tooccur in all Canadian markets as the introduction ofalternative energy forms alters the demand for electricityfor home, commercial and industrial use.

The historical trends in energy pricing describedhere cannot be expected to continue, given the changesthat have taken place in the international oil market, theanticipated scarcity of petroleum and the intensifyingconcern over the environmental implications of increas-ing energy use.

2. FUTURE ENERGY PRICES AND THEIR IMPLICA-TIONS

Future energy prices will be important in Canada'senergy system because these prices and their rates ofchange will influence which alternative energy forms canbe commercialized and the timing of their introduction.Also, energy prices will directly influence the quantitiesof energy consumed and the proportion of incomesavailable for non-energy consumption and investment.There are limits to the size of the energy expenditurewhich we can afford and still maintain our standard ofliving, our commitment to social programs and ourindustrial momentum. Having some idea of future energyprices, and thus some notion of the proportion of per-sonal and national income which will be devoted toenergy in decades to come, is important if we are toplan for our economic future and make appropriatedecisions today.

While this Report cannot give any precise timetablefor the introduction of alternative energy forms, we canstate that the rate of increase in energy prices —particularly oil prices — will influence the rate of de-velopment and commercialization of alternative energy.High rates of increase in real oil prices during the nextdecade will certainly accelerate the process of incor-porating alternative energy sources and technologiesinto our energy system.

Ideally we would like to know in advance whatfuture trends in energy prices will be in order to estimatetheir impact on the economy and to assess the urgencyof developing alternatives. Furthermore, the way inwhich we go about encouraging conservation willdepend on the extent to which higher prices help usreduce the growth in demand for energy. But onecannot know the future and therefore we must examinethe various effects which a number of possible futureenergy price trends might have on the energy sector andon the whole economy. In order to project future energy

prices, one must assess such pricing determinants asdomestic energy policy, demand and supply trends,world economic conditions and political developments.While a broad margin of error may be attached to anyforecast of world prices, it is necessary to make someestimation because of the impact that future prices willhave on all Canadians.

In the course of its work, the Committee initiatedeconomic analyses using three crude oil world priceschedules. These analyses, performed by the EconomicCouncil of Canada, covered the decade of the 1980s.The highest world price schedule considered was basedon a 7% annual increase in real terms to 1990. Theminimum price schedule thought likely to characterizethe present decade was a 1 to 1.5% annual realincrease. The third pricing scenario, simulating the typeof international price shock which occurred in 1973-74and again in 1979-80, incorporated a $15 per barrel realprice increase in 1986 (superimposed on a 1 to 1.5%annual real increase during the 1980s). Pricingschedules similar to those used in the analyses areincluded in Table 5-2. The Committee believes that theupper and lower price scenarios represent an envelopelikely to encompass future world oil prices.

On the other hand, the future domestic price of oil isknown with more certainty because The National EnergyProgram 1980 has set out a schedule of price increasesto 1990. These prices are also included in Table 5-2.The wellhead price of a conventional Alberta crude (38°API gravity) will increase in current dollar terms byalmost 300% from 1980 to 1990. This may seem like alarge increase but, allowing for inflation, it is expected toroughly represent a 65% real increase in price over thedecade. The reader should keep in mind too that thesescheduled prices are not immutable; domestic or inter-national circumstances change and the domestic pricingprogram may have to adapt to new conditions.

The National Energy Program 1980 establishes apricing regime for natural gas which improves its com-petitive position relative to oil over the coming threeyears. This pricing policy will encourage a shift to gasfrom oil, both reducing Canada's requirement for foreigncrude and addressing Western Canada's excess naturalgas productive capacity. As part of this program, theFederal Government will set city-gate prices for naturalgas at the same level in Toronto, Montreal, Quebec andHalifax to promote the extension of the gas distributionsystem into Eastern Quebec and the Maritimes. Thefuture pricing of natural gas is summarized in Table 5-3.

Prices for electricity are expected to increase at arate which will be about 1.2% more than th'., rate ofincrease in the Consumer Price Index (personal com-munication, Department of Energy, Mines andResources, 1981).

88

ENERGY AND THE ECONOMY

Table 5-2: PROJECTED DOMESTIC AND INTERNATIONAL OIL PRICES, 1981-1990Unit: Current Canadian dollars per barrel.

Oil SandsReference

Price(a)

TertiaryOil Price

Conven-tional

WellheadPrice

BlendedPrice

WorldPrice1.5%Real

to

WorldPrice7%Real

WorldPrice

Shock(c.d>

1981198219831984198519861987198819891990

38.0041.8545.8049.8554.1058.5563.2068.3073.7579.65

30.0033.0536.1539.3542.7046.2049.9053.9058.2062.85

18.2520.2522.2526.1330.6337.0044.0051.0058.0065.00

23.3027.8032.3036.1840.6847.0554.0561.0568.0575.05

42.70"»47.3951.9156.9162.2968.0474.1280.6987.7995.52

42.70<e>49.7457.2265.8775.7286.8899.42

113.71129.97148.55

42.70""47.3951.9156.9162.2993.04

101.35110.34120.05130.61

(al Canada, Department of Energy. Mines and Resources, 1980e, p. 26. The oil sands and tertiary pricesbecome effective in January of each year; the conventional wellhead price is averaged for the year inquestion. The oil sands reference price is subject to the limit of international price.

"" Canada, Department of Energy, Mines and Resources, 1980e, p. 30. The blended price is averaged overthe year in question. The Petroleum Compensation Charge of $10.05 is assumed to continue after 1983.Imports are projected to fall to zero in 1390. The blended price will not be allowed to exceed 85% of theinternational price or the average price of crude oil in the United States, whichever is lower.

'c) Real price increases are in addition to the expected annual rate of increase in the U.S. Wholesale PriceIndex for 1981-1990, as estimated by the Wharton School in the United States. For example, if the U.S.Wholesale Price Index rises by 10%, the world price increases by 11.5% in the 1.5% real case, and by17% in the 7% real case. This U.S. price indicator is used because the international price of oil is basedon the American dollar.

wl The world price is calculated to undergo a 1.5% annual real increase in 1982-1990, and a $15 (constant1980 dollars) shock is added in 1986.

(el $42.70 is the current, weighted average world price of crude oil delivered in Canada (personalcommunication, EMR, 1981).

Employing future energy pricing schedules similar tothose presented here, the Economic Council estimatedtheir effects on the Canadian economy for the Commit-tee. As expected, it was found that the more self-suffi-cient Canada is in petroleum by 1990, the lower the rateof inflation; the smaller the Federal deficit; the smallerthe current account deficit; the greater the value of thedollar; and the greater both employment and the growthin aggregate output. To the extent that Canada remainsdependent upon foreign supplies of crude oil, we areprone to inflation arising from increases in the world oilprice. By folding the total cost of imports into theblended price by 1983, the domestic price of oil will risemore than expected if Canada's imports remain largeand if the international price undergoes major increases.Clearly, the health of the Canadian economy is improvedby eliminating our reliance on oil imports.

The Economic Council's analysis was based uponthe price and supply of conventional oil and gas, syn-

thetic oil from the tar sands and possible frontier sup-plies. This is an appropriate approach since, in the shortterm, the domestic price of oil will continue to be thereference point for pricing energy in our economy.Energy alternatives will not make a significant change inthis state of affairs in the 1980s.

Alternatives will enter the market and become com-petitive at prices which are about equal to those ofconventional energy sources for the same energy ser-vices. Nevertheless, we may be willing to pay more foralternative energy because we believe there will befuture economic gains and because of less tangibleadvantages such as security of supply. It is possible toroughly estimate when a given alternative may be com-petitive with conventional fuels and technologies,depending on the rate of change of conventional energyprices. Although such estimates are highly sensitive tothe quality of data and the nature of underlying assump-

89

Table

Date

1980

5-3: COMPARISON OF FUTURE CRUDEOIL AND NATURAL GAS PRICESUNDER THE NATIONAL ENERGYPROGRAM

EasternCanada

Gas Price($/Mcf)

2 42

Under the National Energy Prograrr

198119821983

<•> $1

2.983 393.84

per Mcf = $5.80 per barrel.

Gas Priceas a

Percentageof Oil'3»

(%)

80

716867

Source: Canada, Department ot Energy. Mines andResources, 1980e, p. 32.

tions about prices and costs, they can provide someinsight into the timing of development in Canada'senergy system.

Cost comparisons among conventional energyforms and alternative options, done by MiddletonAssociates for the Committee, used estimates of equip-ment efficiencies, system lifetimes, capital and operatingcosts, and similar parameters to arrive at such esti-mates. Three conventional energy price scenarios (simi-lar to those used by the Economic Council in its work forthe Committee), comprising elements of world anddomestic price forecasts, were used in the analysis.

Middleton Associates found in the transportationsector, for example, that methanol could become com-

petitive with gasoline by 1985 if higher rates of increasein domestic oil prices were allowed, but not until theearly 1990s if oil price increases were small. Com-pressed natural gas and propane were found to becompetitive as motor fuels today, regardless of gasolineprice increases. The main barriers facing these two fuelsare market readiness in the short term and supplylimitations in the longer term.

As a substitute for oil in electrical generation, coalcombustion using fluidized bed technology was con-sidered to be economical with either high or low oil priceincreases. Wind turbines, on the other hand, may not beeconomical until 1990 if the rise in the domestic price ofoil is small.

Among those energy sources analyzed for substitu-tion in residential and industrial heating applications,solar water heating appears to be the most sensitive toconventional energy prices. At low rates of conventionalenergy price increase, solar heating of water may not beeconomic without incentives until after 1995. The samecan be said for heat pumps competing in areas servicedby natural gas (although as a substitute for other fuels,heat pumps are economically preferable now or in thenear future). Wood waste as a fuel is preferable, whereapplicable, through the present decade and beyond,regardless of conventional fuel prices.

Co-generating systems are largely competitive now,although higher rates of increase in oil prices couldmake oil-fired systems uneconomical towards the end ofthe decade.

It is accepted by most energy analysts that the realprice of energy will continue to increase for a consider-able time to come. As conventional energy costs esca-late, the alternatives will become increasingly competi-tive and technological breakthroughs may be expectedto lower the real cost of some of them. By reducing ourenergy requirements, we may also be able to moderatethe rate of increase in the total cost of energy serviceseven in the face of rising prices.

90

The Economics of Energy Supply,Demand and Conservation

W e have already stressed that, notwithstandingCanada's present self-sufficiency in energy in an

aggregate sense, this country faces a growing shortfallin the commodity that matters most — oil. Minimizingour petroleum imports in the 1980s would be reasonenough to institute a vigorous program of energy con-servation in view of the economic and strategic prob-lems involved in such dependence. But conservationpays other dividends as well. We already know a consid-erable amount about energy-c<~-iserving technologies,which reduces the "trial and error" aspect of new initia-tives. Restraining demand will in many situations be lesscostly than extending supply. Conservation technologiescan often be more rapidly deployed than supply tech-nologies. And energy conservation reduces some of theindirect costs of energy use such as environmental con-tamination.

Conserved energy represents a special class ofalternative energy, not dependent on bringing forth newsupplies. Conservation saves consumer dollars and capi-tal, and contributes to an improved balance of pay-ments through reduced expenditures on foreign oil. Con-servation programs will likely create employment andincome through expansion of that part of industry whichsupplies conservation goods and services. Other impor-tant and extensive benefits will derive from a conserva-tion-oriented economy as well, not the least of which isthe reward of long-term energy self-sufficiency.

The consequences of conservation decisions andpolicies are complex and numerous but a successfulprogram of conservation would moderate the rate ofgrowth in energy demand and lessen the pressure tofind alternatives to present means of supplying energy.Conservation programs and energy supply programsrequire long-term planning, but through providing time,conservation increases the range of energy alternativeswhich may be evaluated and pursued. In other words,conservation can increase Canada's supply options ifwe seize the opportunity.

1. CONSERVATION DEFINED

Conservation has many connotations. To some itmay imply a backwoods life style. To others the termmay be associated with the imposition of strict controls

on resource use, or even non-use. Certainly, the way inwhich Canadians view conservation will influence howCanada formulates a method for determining the bestschedule of resource use in the future. Through a greaterunderstanding of the market and institutional forceswhich influence conservation practice, we will be betterable to assess the appropriateness of incentives andregulatory measures, "carrots and sticks", forencouraging enlightened energy use.

Conservation may be thought of as reducing theconsumption of a resource in the near future so as tohave more of it available in the more distant future.Conservation has also been defined as the

...careful use of renewable and non-renewableresources to ensure their greatest long-term benefit tosociety... (Crane, 19B0, p. 67)

Conservation does not mean non-use, nor "wise" use,nor does it necessarily mean use at a constant rate. It isnot synonymous with maximum sustained use nor max-imum cumulative use. Conservation economics consid-ers both demand and supply, and producers may (andfrequently do) practice conservation as well as consum-ers. Deciding whether conservation or its opposite,depletion, is appropriate in a given situation is notalways easy.

An Economist's Definition of Conservation andDepletion

Conservation is defined in a strictly economicsense as the redistribution of use rates ofresources towards the future. Thus conservationalways implies a comparison of two or more timedistributions of use rates; that is, the supply andconsumption of energy per unit of time over anumber of units of time. The opposite of conserva-tion is depletion — the redistribution of use ratestoward the present.

2. WHAT FACTORS AFFECT CONSERVATION?

Many institutional and economic forces affect con-servation. Among the most powerful influences arehabits. Does one drive at moderate or at excessive

91

speeds? Does one wear a sweater in a chilly room orturn up the thermostat instead? Altering, redirecting orreplacing certain culturally-based practices and tradi-tions will facilitate the adoption of conservation prac-tices. While economic conditions may force us to con-server changing our-life-styles to ~ cope * wi th ; heweconomic realities will make the transition less painful.Higher gasoline prices may encourage many of us tobuy smaller, lighter cars; however, if we learn to likesmall cars,.we will not resent having had to make thechange. We may even be happier for having contributedto the conservation effort.

There are numerous other economic forces whichaffect conservation, including interest rates, uncertainty,taxation, subsidies and prices.

Interest rates directly affect conservation decisions"and are of particular practical significance in the analysis

: of resource use over time. Interest rates are employed in -resource use planning for making net benefits (benefitsminus costs) received in different time intervals compa-rable in the present. Those net benefits which accrue inthe distant future are held to be less valuable than thosewhich we enjoy today, therefore we tend to discountthem the most. The factor by which we discount futurebenefits depends on the real interest rate (adjusted forinflation). A high rate of discount implies that current netbenefits of resource extraction, for example, are farmore valuable than future ones; therefore, depletiontakes precedence over conservation and presen* userates increase. Hence, when real interest rates increase,the present value of future net benefits decreases anddepletion takes place. Conversely, a decrease in interestrates tends towards conservation by making benefitsrelatively more valuable in the future.

Interest Rates and Conservation

How might a change in interest rates effcst oilconservation? The present value of a $100 annualsaving resulting from an investment in energy-sav-ing equipment (let's say from the installation of anew heating system), over ten years of operationof the equipment is $502 after being discounted ata 15% interest rate. At a 12% interest rate,however, the saving is discounted somewhat lesssuch that the ten-year saving has a present worthof $566. Thus, at a 12% rate of interest, there isrelatively more incentive to install energy-savingequipment. If the new heating system is moreefficient and uses less fuel, then a decrease ininterest rates acts to conserve energy.

the near future because these benefits usually have thegreatest certainty. When deciding which type of heatingsystem to install, an individual will buy equipment withthe greatest probability for generating savings in the firstfew years of operation. People are naturally reluctant tomake such investments ii they are uncertain about thesavings they will bring. Reducing uncertainty thereforepromotes better conservation decisions.

The',imposition of"faxes, and subsidies will affectconservation decisions depending upon when they areintroduced and how long they last. Taxation generallyincreases price and reduces profitability, thus resourceconsumers and producers shift use rates to those timeintervals when the impact of a tax is smallest. Converse-ly, use rates are shifted to intervals in which subsidybenefits are greatest. In general, greater energy con-sumption will take place in periods with less uncertaintyabout profitability and supply, less taxation, greatersubsidies and lower prices. =~

3. CONSERVATION OBJECTIVES, DECISIONS ANDPOLICIES

Toward what objectives are conservation effortsdirected? On what basis can decisions be made regard-ing the appropriate level of conservation? How canconservation objectives be achieved?

When an individual makes a conservation decision,his objective is to maintain or increase his long-termstandard of living. When a business makes a conserva-tion decision, it is interested in reducing costs and/orincreasing profits. Individuals and businesses are morelikely to make good conservation decisions if they con-sider all of the costs and benefits arising from a pro-posed conservation measure. Once the relevant costsand benefits are estimated, it is a relatively simplematter to determine the present value of the proposedproject by applying the market discount factor (that is,the discount factor relating to the rate of return which islikely to prevail over the life of the project).

Discounting and Present Value

Fifty-seven dollars placed in a savings deposittoday with a 12% rate of interest will earn in fiveyears approximately $43 (compounded annually),such that the savings deposit will be worth $100.Thus the present value of $100 five years hence,discounted at a 12% rate of interest, is about$57.

The effects of uncertainty work similarly. People putgreater emphasis on benefits they expect to receive in

If the present value of future benefits exceeds thepresent value of future costs plus the initial investment,then the proposal is economically desirable. Such a

92

ENERGY AND THE ECONOMY

cost-benefit analysis is as applicable to small projects(insulating a house) as it is to large projects (building amethanol plant).

Since individuals and firms do not need to considerexternal or social costs, their task when making suchdecisions is fairly straightforward. However, the desiredstate of conservation in the economy, while conceptuallywell-defined, is difficult, if not impossible, to determine inthe real world — public conservation efforts involvecosts and benefits which may not be readily assessed indollar terms. For example, what is the ultimate value of anation's energy self-sufficiency, or of the enjoymentreceived from an extra day's vacation bought with themoney saved in driving a more efficient automobile?

Appropriate levels of public investment in conserva-tion can in theory be determined by evaluating social netbenefits but, in practice, this will be difficult. Although inprinciple the conservation objective is to increase totalsocial net benefits, in practice we cannot know withcertainty whether this is being achieved. There arenonetheless some practical guiding principles in for-mulating resource use policies. For renewable resourcesthese include measures to prevent wastage, environ-mental damage and irreversible declines in resource flowrates. For nonrenewable resources, conservation objec-tives include rational rates of use and the discovery anddevelopment of efficient energy technologies andalternatives.

By influencing economic forces, governments mayindirectly change the schedule of resource use ratesover time to induce conservation. Direct intervention bythe state may be necessary to achieve certain conserva-tion goals. Direct tools include education in and regula-tion of use. Public education can be particularly effectivein reforming habit patterns to make them conducive toenergy conservation. Regulation of conventional energyuse can also encourage conservation, minimumperformance standards for automobiles being oneexample.

As individuals we will often make conservation deci-sions based on our incomes. One individual may chooseto spend part of a week's wages on gasoline for aweekend jaunt while another person may receive moresatisfaction from spending the money to improve theinsulation in his home. As a society we will make conser-vation decisions based on the disposition of nationalincome, relative to energy and all other goods andservices.

Conservation decisions are predicated on our con-cern for the long-term viability of our economy and thewelfare of future generations. Conservation of exhaust-ible energy resourced will assure us of continuing sup-plies for years to come. Having conventional sources ofenergy in the year 2010 may be important if beingwithout sufficient alternatives at that time would mean

the deterioration of our economy and way of life. Con-serving exhaustible sources of energy for the future isthus a form of insurance against unforeseen problemsand events. It does not remove the need for effective,affordable alternatives.

4. PRICING CRITERIA FOR ALTERNATIVE ENERGYAND OIL SUBSTITUTES

The prices of the major conventional energyresources in Canada — oil, gas, coal and primaryelectricity — are regulated and therefore largely deter-mined by government policy. We present the argumentelsewhere in this Report that the true cost to Canadiansof conventional energy is implicitly the world price andthat we pay the difference in taxes, foregone oil revenue,and net income and production losses.

Determining the true cost of conventional energy inCanada is, as with all energy matters, complex. Howcan one then expect to determine the price of alterna-tive energy, which for the most part will be supplied bytechnologies not yet in place and fo< which structuredmarkets are only beginning to emerge? Fortunately,there are some methods by which the price of substi-tutes can be estimated. As a general rule, we mayexpect that energy alternatives will enter the system a*prices which approximate those of conventional formsfor given uses. The relevant value of each new unit ofenergy, however, is its replacement cost. What will theprices of alternative energy forms be in the long run? Ina purely competitive market we would expect the priceof a good to be based on its long-run cost of produc-tion. In practice, in real world energy markets beset bymarket imperfections, by economic power concentra-tions and by government intervention, energy prices willonly crudely reflect changes in the long-run cost perunit.

Since time and future prices are factors in determin-ing the role of alternative energy forms and the appropri-ate pricing of conventional forms, alternative energysources cannot be properly assessed by consideringonly present circumstances. The pricing of energy overtime should be related to the long-term value of theresource. Views of what the best pricing schedule is willvary considerably depending upon the perspective ofthe person or group making the decision.

Consider the Organization of Petroleum ExportingCountries, an influential body in oil supply and pricing ona world scale, ft is advantageous for the OPEC nationsto act in concert and price their oil in order to get themost return from their total resource. They manipulatesupply in order to influence demand and price. Byrestricting supply the OPEC countries achieve two eco-nomic objectives (not to mention a few political ones):

93

they raise current prices, and they make more oil avail-able in future years when the value of the oil may behigher still. Canada must balance the goal of pricingenergy to get the most benefit from our natural energyassets with the goal of preserving the welfare of Canadi-ans as a whole.

We have said that the pricing of conventionalenergy will iniiuence the timing and the cost competitive-ness of alternative energy sources. From the point ofview of Canadians, the price of alternative energysources should be such that the value of the benefitsless costs derived from the use of these enprgyresources are as large as possible. Benefits will includeemployment and income gains, an improved trade bal-ance and other less tangible benefits such as security ofsupply and environmental quality. Costs will includethose incurred in shifting to alternative energy sourcesand technologies, especially if they are adopted beforebecoming economically competitive. It should beremembered nonetheless that society may choose tobear the cost of an early conversion to alternatives inorder to benefit from security and diversity of energysupply.

5. DEMAND, CONSERVATION AND PRICES

The Committee recognizes that there is consider-able debate over the effectiveness, fairness and wisdomof increasing the price of petroleum products as ameans of promoting oil conservation and inducing great-er use of alternatives. Some knowledge of the respon-siveness of demand to price increases is essential, how-ever, because such increases create hardships for manyindividuals '.r, Canada, particularly those with low or fixedincomes. While it is evident that for most commoditiesincreased prices result in diminished demand, with somegoods this response is not pronounced and may bemasked by income changes and other factors. Withpetroleum products, particularly gasoline, our percep-tion of demand is complicated by changes in incomes,changes in consumer priorities in spending incomes, andby changes ;n technology. We have observed in Europe,where gasoline prices are three to four times those inCanada, that many people continue to drive, very oftenat high speeds. European drivers do, however, use sub-stantially less fuel per passenger-kilometre travelledalthough it is unlikely that this would be the case if thereal price of fuel in Europe were as low as in Canada.

Given sufficient time, the stock of automobiles (orheating systems or industrial equipment) will turn over toreject the higher cost of energy. Time is needed forautomobile manufacturers to redesign engines, removeexcess weight and improve aerodynamics. Furthermore,consumers will not immediately trade a less efficient carfor a more efficient one each time fuel prices increase,but they may well consider a smaller, more efficient

The Relationship Between Demand and Price

Economists frequently measure the change inthe quantity demanded of a good resulting from achange in the price of that good. This measure —the price-elasticity of demand — is usuallyexpressed as the percentage change in the quan-tity demanded for a one per cent change in price,assuming no change in the tastes or incomes ofthe group of consumers whose demand character-istics are being studied. Such studies have deter-mined that in recent years for each 1 % increasein gasoline prices, consumption decreases by0.18-0.45% (Friedenberg and Nixon, 1980, p.32).

Put in more familiar terms, a demand priceelasticity of -0 .18 to —0.45 means that anincrease in price from 25<t to 30<t per litre (a 20 %increase) would cause an average Canadiandriver, who normally consumed 500 litres of gaso-line annually, to reduce consumption by 18 to 45litres per annum. Of course this would apply only ifhe or she continued to drive a car with the sameefficiency, maintained his or her driving habits,and drove the same mix of city and highway miles.Unfortunately this is difficult to observe in practicebecause drivers do buy more efficient cars and dochange their driving habits. Furthermore, esti-mates of the responsiveness of demand to priceincreases apply only to a limited range of pricesand quantities consumed over specific recentyears, reflecting preferences and incomes prevail-ing at the time. With much higher prices, or withhigher rates of increase of prices, the responsemay vary considerably.

vehicle when replacement does become necessary. Asthis also applies for other durable items which consumeenergy, several years may be required before weobserve a change in demand determinants. Thus, in thelong run, the demand (and supply) response to pricechanges will be greater as manufacturers are able tochange designs and as consumers incorporate moreefficient technologies into their lives.

Rates of price increase are an important factor.High and infrequent rates of increase have a shockeffect but people can become accustomed to slew priceincreases and adjust to them. Even following a priceshock, however, demand may be at least partially rees-tablished following an initial reduction in the rate ofconsumption.

Not all petroleum products are as price insensitiveas gasoline. Consumption of industrial fuel oil and trans-portation diesel fuel has been estimated to decline by

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ENERGY AND THE ECONOMY

about 1.3% tor every 1 % increase in price. Perhaps thisis because industries and commercial transportationcompanies which are in pursuit of profits are quicker toadopt more efficient technologies or to change produc-tion or management practices. They may also have attheir disposal a monitoring system allowing them todetermine consumption and hence the conservationinvestment required to offset increased fuel prices.

Once again it must be emphasized that the esti-mates of the reaction of the commercial consumer toprice are limited to a certain range of prices and quanti-ties during the past decade. Furthermore, the sensitivityto price is likely to increase for some energy applicationsover the very long run. In the short run, price increases ;

may have a small impact if individuals cannot substitutemore efficient technologies.

6. DELAYS IN ADOPTING ALTERNATIVES

A number of energy alternatives and conservationmeasures appear to be economically viable today. Ittakes time, however, for a given technology to be putinto place, for a new design to become widely acceptedor for a practice to become widely adopted. There arebasic economic reasons for this. Some are obvious;others are more difficult to explain.

Take the example of a house with an old oil fur-nace. More efficient neating systems are now on themarket, including more efficient oil furnaces themselves.Why then do many homes continue to be neated withold furnaces In the face of higher heating costs? Suchrelatively expensive items tend to stay in service longafter their replacement seems advisable. The reasons forthis relate to the economics of fixed assets.

• Markets for such assets may be imperfect. Informa-tion may be inadequate and an individual may notknow about cheaper alternatives.

• Decision-makers may not correctly assess the ben-efits of replacing an old inefficient system because thecosts and benefits which accrue over time areignored.

• The old system may continue to deliver service worthmore than iis salvage or trade-in value, while thenormal requirements of the system do not warrant thecapital outlay for a new system.

The first two points can be addressed by appropri-ate policies. The last point is an economic fact of lifewhich is characteristic of all fixed assets, the effects of

which can nevertheless be overcome by appropriateincentive programs. Conversion grants, for example,have the effect of decreasing the cost of the servicesoffered by a new system. Two examples of such grantsoffered by_ the Federal Government are: (1) grants toassist homeowners and businesses for conversion fromoil to gas, electricity, renewable and other energysources, up to 50% of conversion costs to a maximumof $800; and (2) grants to commercial fleet owners of upto $400 per vehicle to convert to propane.

To further illustrate the impact of the above con-straints, let us once again look at the example of replac-ing an outdated heating system. Canadians changeresidences frequently and many of us are tenants. Weare therefore reluctant to make investments in insulationand more efficient heating systems because our costsmay not be fully recovered. If the third constraintapplies, then both owner and tenant are acting rational-ly. The owner may not, though, have full knowledge ofheating system alternatives or may not be correctlyassessing the benefits of a new system. In this regard,the dissemination of information about alternatives andabout methods for correctly assessing costs and ben-efits over time through the application of "life cycle"costing analyses will be effective in overcoming delays inthe adoption of alternative technologies.

Life Cycie Cost Analysis

Life cycle cost is the total of all relevant costsassociated with an activity or project during thetime it is analyzed, including all costs of owner-ship, operation and maintenance. The life cycle isthe period of time between the starting point andcutoff date of analysis over which the costs andbenefits of a certain alternative are incurred. If lifecycle benefits exceed life cycle costs, then theproject is economically desirable.

In any event, delays must be anticipated and takeninto account when analyzing the probable impact ofenergy-related policies. Failure to do so may lead tofrustration with the pace of adoption of new technolo-gies and energy conservation measures, and henceunwarranted condemnation of good policies. Firm actionand consistent policies will help assure rapid progress inthe adoption of conservation practices and new energy-efficient technologies.

95

Energy and Growth

I t is well accepted that the continued availability ofenergy is crucial for the improvement and even the

maintenance of our standard of living. However,because it is also true that the amount of energy that weneed to perform tasks is to some extent variable, bothdemand and supply considerations of all our energyresources deserve attention. The purpose of this sectionis to investigate the relationship between the productionand consumption of energy and economic growth.

1. ENERGY CONSUMPTION AND THE GROSSDOMESTIC PRODUCT

Productivity has increased in Canada, generatingmore goods and improving services, because the use ofcapital has expanded as has the use of non-humanenergy sources. Economic growth has been possiblebecause more plentiful and better resources of all kindshave been made available. With fixed resources and notechnological change, there would have been little scopefor increasing output. But more skilled labour, betterorganized production processes, cheap and plentifulenergy, specialization of tasks and more efficient ma-chinery all have contributed to growth. Textiles, forinstance, no longer come from a labour-intensive cot-tage industry but instead are produced in automatedtextile factories which are capable of a much greateroutput for each worker employed.

As the industrial structure changed over time, thedemand for energy grew. The limited energy servicesprovided by wind, water, wood, animals and humanswere no longer sufficient. The "new" energy sourcesanswered changing demands for more reliable, plentifuland manageable sources of power and they, in turn,provided the ability to expand output. The process hasbeen self-reinforcing, with output growth demandingenergy and energy enabling growth.

Historically, economic growth has required moreenergy services from different types of sources. Theresponse to changing demand has been an evolvingpattern or mix of energy sources which in turn has beeninfluenced by resource availability and by technologicalprogress. These factors have affected the amount ofenergy used in production and the quantities and kindsof output generated. Consumption patterns for different

Factors of Production

Factors of production, or inputs, are the pro-ductive resources which are used to create goodsand services. The inputs can be used in a varietyof combinations according to technical con-straints and relative input costs.

Land as a factor of production includes notonly the land itself but water, natural resourcesand soil quality. Some have argued that energyshould be included as a separate factor of produc-tion in order to emphasize its importance.

Capital includes the physical amount (orstock) of factories, transportation systems, build-ings, machinery and equipment. Further invest-ments in capital increase the stock of capital.

Labour is the physical capacity of workerswhich includes their human capital or skills andtheir knowledge. Managerial ability can be includ-ed in the measurement of knowledge and skill.

fuels over time are shown for the United States in Figure5-4. This illustration shows that the use of fuel wood inthe nineteenth century was supplanted by the increaseduse of coal. Coal's contribution to satisfying U.S. energyneeds peaked just after the turn of the century and itsdecline was offset in turn by the rising importance ofcrude oil and natural gas.

It is a simple matter ro document the changingpattern of energy sources used and the increasingdomestic output which has contributed to improvedstandards of living. However, the relationship betweenenergy consumption and economic growth is not asimple one to uncover. From Table 5-4 it is clear thatgrowth in output has occurred along with increasedenergy use. While few would say that this relationship isentirely fixed, many question whether growth can con-tinue in an economy where a cheap and abundantsource of energy is not available. We are thus approach-ing a turning point, similar to ones experienced in thepast, when a transition will have to be made from onedominant fuel to another. The difficulty of this transitionand the length of time it will take depend on manyfactors, some of which are outlined in this section.

97

Figure 5-4: ENERGY FORMS SATISFYING PRIMARY ENERGY DEMAND IN THE UNITED STATES SINCE 1850

90%

30%

20%

10%

1850 1860 1870 1880 1890 1900 19 0 1920 1930 1940 1950 1960 1970 1980

Note: The break in the curves in 1955 reflects the slight discrepancies between the two sets of data used to prepare the illustration.

Source: After Rosenberg, 1980, p. 60: and DeGolyer and MacNaughton, 1980, p. 104.

Table 5-4: CANADIAN OIL CONSUMPTION ANDREAL GNP, 1972-1979

DomesticConsumption of

Refined Real GrossPetroleum NationalProducts Product

(Thousand cubic (millions ofYear metres/day) 1971 dollars)

1972 253.1 100,2481973 262.8 107.8121974 269.8 111,6781975 266.3 113.005

1976 272.5 119.1161977 277.6 121,9491978 284.5 126,1271979 300.9 129,658

Average AnnualGrowth Rate 2.5% 3.7%

Source: Friedenberg and Nixon, 1980. p. 7.

Gross Domestic and Gross National Product

Gross Domestic Product (GDP) is a measureof the value of production of goods and services inthe economy. GDP includes all returns on invest-ment within Canada's borders and thereforeincludes the returns on foreign investment here.

Gross National Product (GNP) is similar toGDP but it excludes the returns on investments inCanada which are received by foreigners andincludes the value of goods and services producedby all Canadians whether resident or non-resi-dent.

Other countries without indigenous oil resourcesfaced the changing oil situation much earlier thanCanada. Their major way of dealing with more expensiveenergy was to alter the way they used it. It would seemthat they were able to adjust successfully because the

98

ENERGY AND THE ECONOMY

amount of energy consumed in relation to the value ofnational output generated has been maintained (Figure5-5). while the rate of economic growth was kept at alevel at least as great as in Canada and in some casesmuch higher (Figure 5-6). In fact, in the 1977-1979period, every other country surveyed in Figure 5-5enjoyed improved economic growth while Canada, evenwith cheap oil, continued to suffer from a decline in thegrowth of real GDP. It appears, therefore, that sinceother economies can perform healthily on less energy,there must be opportunities in Canada for less energy-intensive methods of production.

Figure 5-5: INDEX OF ENERGY CONSUMPTIONPER CONSTANT DOLLAR OF GROSSDOMESTIC PRODUCT IN SELECTEDCOUNTRIES, 1970-1976, NORMALIZEDTO A VALUE OF 100 FOR CANADA

1970 1971 1972 1973 1974 1975 1976

Source: After Slagorsky, 1979, p. 4.

The energy intensities of the economies of Figure5-5 are reflected in the level of energy use per dollar ofGross Domestic Product while trends in the ratio reflectboth a changing energy intensity and possible efficiencygains. Canada does use more energy per dollar of GDPthan the other countries shown but it is not appropriateto draw too many conclusions from the comparisons ofaggregate energy use among countries simply becausethis broad measure hides important differences. Energy

intensity of the overall economy can be high in compari-son with other economies even though energy efficiencymay be high as well. This will be the case where thereare many industries which require large amounts ofenergy to produce a given dollar value of output (alumi-num smelting being an example). Energy-intensiveindustries may use technologies which are efficient intheir use of energy but the process itself may simplyrequire large amounts of energy. For instance, existingtechnologies dictate that some 35 megajoules of energyper kilogram of product must be used to produce fertiliz-er while 200 MJ/kg is necessary in the production ofpaint (Slesser, 1978).

Other factors also affect levels of energy consump-tion. Colder and more sparsely populated countries usemore energy for heating and transportation purposes.Since resource endowments differ amongst countries,different industrial patterns develop. Canada, with itsparticular array of natural resources, has developedmineral extraction, smelting and pulp and paper indus-tries which require large amounts of energy. Most impor-tantly though, Canada has a varied and plentiful indige-nous supply of energy which has led to more modestenergy prices than those characteristic of countrieswhich do not enjoy the same resource abundance.

Aga-'sgate energy/output ratios do, however, havevalue for indicating the broad performance of Canadianproduction against that of other countries and theyprovide clues about where energy-saving opportunitiesexist. When these ratios are calculated for individualindustries, the results are even more useful. An analysisof energy/output ratios for specific industries and sec-tors in Canada shows that the greatest opportunities forreduced energy use are in the petroleum, crude steeland pulp and paper industries and in the transportationand residential sectors (Slagorsky, 1979). In the trans-portation sector — where Canadians consume twice asmuch energy per capita as do the Japanese andEuropeans — the most significant potential savings lie inroad transport. Although the differences in energy con-sumption per dwelling among countries are not as sig-nificant, savings are also possible in the Canadian resi-dential sector.

Comparisons among nations indicate, therefore,that the energy consumed per unit of output is notnecessarily a fixed relationship. This result is an exten-sion of the idea that energy use and output growth havevaried historically according to changes in the economicand physical environment. Energy use will evolve inCanada and experience in other industrialized countriesis evidence that this change need not be economicallydestructive.

The primary incentive to lower the rate of growth inenergy demand in many countries results from their lackof plentiful indigenous energy supplies at a time when oil

99

Figure 5-6: AVERAGE ANNUAL PERCENTAGECHANGE IN REAL GROSS DOMESTICPRODUCT, CANADA AND MAJOROECD COUNTRIES, 1967-1979

-12

1974-1976 mm1077 107

g £ - = £ •- i

£ i- Si g I

Source: After Economie Council of Canada, 1980. p. 8.

prices are rising. In Canada, the relative advantages ofenergy abundance and low price have sheltered us frominternational developments and lessened the incentive toconserve energy. On an aggregate basis, Canada isusing its cheap and abundant resources relatively moreintensively than other resources such as capital andlabour. Canadians can certainly use less energy in pro-duction in the short run but production costs will rise ifmore labour and capital must be employed instead.

The degree of total energy savings possible in thiscountry is unclear. It seems that growth can occur withless energy usage — a truly desirable condition — butthe relationship between growth and energy consump-tion has not been clearly uncovered. If, in fact, thelong-term growth potential of the economy will be ham-

pered by using less energy (particularly oil) today, thenwe should be aware of this since we will have to decidewhether we were willing to accept smaller real incomes.If we are not willing to lower our income expectations,then investment in alternative sources of energy isurgently needed. Since the resolution of this uncertaintyis imperative, thé relationship between energy consump- -tion and economic growth in Canada should be thor-oughly investigated.

2. ENERGY CONSUMPTION BY PRODUCERS

The existing stock of capital in our economy is theresult of investment decisions made in circumstanceswhich were quite different from those prevailing today. Inthe past, as labour became a relatively more expensiveinput than energy, producers bought energy-intensiverather than labour-intensive machinery and equipment.Unfortunately, Canada is now locked, in the short termat least, into an economy which dictates a high rate of

: energy use. Nevertheless, producers do have some lati-tude to reduce energy consumption by varying the waythey use factors of production. As examples, labour canbe substituted for energy in certain circumstances and.where feasible, cheaper fuels can be substituted for oil.

In the longer run, energy demand changes becausethe total amount, or stock, of energy-using capitalchanges. When investment decisions are made, pro-ducers take into account the expected relative pricesand security of energy supplies and they attempt tosubstitute more energy-efficient capital and labour forenergy if changing relative prices and energy securitywarrant these substitutions. However, the state of tech-nological advancement limits how much capital can besubstituted for energy and energy efficiency is only apriority in producers' decisions to the extent that relativeprices indicate that it should be.

Burdens of higher energy costs are greatest whensubstitution possibilities are restricted and energy'sshare of production costs is high. The result is reducedoutput, higher costs and inflationary pressure. Far toolittle work has been done though to identify in any detailthe probable long-run impact of higher energy prices inCanada's industrial output. Studies should be done tofirst indicate how Canada's industrial mix will change asenergy becomes increasingly expensive and, secondly,to offer ways of dealing with the change.

3. THE ROLE OF NEW ENERGY SOURCES ANDTECHNOLOGICAL CHANGE

If future economic growth were to diminish to acondition of recession as a result of decreased energyuse, then the energy strategy would be obvious —energy supply would have to be increased. Even withrigorous energy conservation, we can anticipate a timewhen energy demand management will no longer bal-

100

ENERGY AND THE ECONOMY

ance the supply-demand equation. Given the long-runphysical limitations of conventional energy supply, thedevelopment of renewable energy sources is thereforeessential and inevitable. Time is the variable.

Existing technology determines the manner in whichproduction takes place. It also places limitations on thegrowth of the economy. As energy scarcity intensifies,changes in technology are unavoidable. The potentialsuccess of these changes and their contribution to over-coming an energy shortfall is unknown.

Canada's most pressing needs are for better infor-mation on feedbacks in the economy which involveenergy; better market signals to reflect the changingcosts of alternatives; and incentives which encouragetechnological change bearing on energy demand andsupply. Easing the substitution of other inputs for energyand reducing the share'ofenergy in total productioncosts^are endeavours* which could benefit significantlyfrom new innovations.

101

Balance of Payments, EnergyTrade And Investment

The Canadian economy is frequently under pressuredue to the volume of our imports, and rising oil prices

have meant even larger payments abroad. A majorbenefit of developing alternative energy forms in Canadashouid be a long-term amelioration in balance of pay-ments problems.

As a trading nation, Canada earns roughly 35% ofits income from exporting goods and services. Canadahas an energy-intensive economy and although we are anet exporter of energy overall (principally by virtue ofnatural gas sales in U.S. markets), we are a net importerof crude oil at a rate of about 300,000 barrels per day.The annual cost of these net imports now exceeds $4billion, having approximately doubled in 1980 from theprevious year. The rate at which oil is imported seemscertain to increase at least through the mid-1980s.

Canadians purchase large quantities of foreign-made goods such as automobiles, electronic equipment,food, clothing and so on. We sell a combination of food,manufactured goods, semi-processed goods and rawmaterials. A substantial share of the export revenueneeded to finance our imports throughout the 1970s hasbeen provided by energy. Prospects appear good thatexports of electricity will continue to grow and exports ofnatural gas, surplus to forecast domestic needs, willcontinue into the 1990s under existing contracts.Exports of alternative energy technologies offer yetanother possibility for the future.

Balance of payments surpluses and deficits aremore than obscure accounting entries. Internationaltransactions affect every aspect of our economy and thelives of all Canadians. Properly managed, our trade andforeign investment capital inflows can be advantageousin terms of increasing incomes and maintaining employ-ment. Energy development is a critical part of the bal-ance of payments equation because it is capital inten-sive in nature and because, traditionally, it has requiredlarge amounts of foreign investment.

Canada's current account deficit, as a proportion ofGNP, was amongst the highest in the Western World inthe late 1970s — despite the fact that our merchandisetrade balance was positive and rising during that decade(Figures 5-7 and 5-8). The sale of energy has thereforemade an important contribution in offsetting deficits in

other goods and services (the deficit in "invisibleexports" such as foreign travel is notable). More recent-ly, the decline in the value of the Canadian dollar hashelped make Canadian goods more competitive onworld markets, and this coupled with a moderation inthe growth of imports, generated an impressive mer-chandise trade surplus in 1980.

Figure 5-7: CANADA'S MERCHANDISE TRADEBALANCE

1976 1977 1978 ' 1979 ' 1980

Source: Bank of Nova Scotia, 1980, p. 2.

Canada has been one of the largest borrowers oninternational money markets. Our debt service paymentsto foreigners have more than doubled since the 1950s.Large borrowings in foreign capital markets by provin-cial crown corporations for investment purposes in the1970s contributed to a significant increase in debt ser-vice payment outflows (which come under the currentaccount).

The deficit on interest and dividend payments toforeigners has continued to grow (Figure 5-8). Thus thestrengthening in Canada's trade balance is not neces-sarily indicative of a medium-term trend towards overallsurpluses, especially in light of our medium-term energyneeds and the rising cost of foreign petroleum. Foreign

103

capital inflows to finance the development of energysupplies in the 80s and 90s will be advantageous interms of the overail balance of payments.

Figure 5-8: CANADA'S EXTERNAL ACCOUNTBALANCES

What Is Meant by the Terms Balance of Pay-ments and Balance of Trade?

The balance of payments is a summary of allthe transactions between Canadians and residentsof the rest of the world over a given period of time.The balance of payments is divided into twoaccounts. The current account records the flow ofgoods and services between Canada and the restof the world: merchandise imports and exportsand non-merchandise transactions such as traveland tourist spending, payments and receipts forbusiness services, interest and dividend payments,and research and development.

The capital account consists of long- andshort-term capital flows between Canada andother countries. These flows include direct andportfolio investments, short-term investments suchas commercial paper, bank term deposits andcertificates of deposit for terms of one year orless, Canadian foreign aid and export creditfinancing, and other movement of funds. Canadausually imports more capital than it exports. Sincepayments must balance at zero, the balancingitem consists of a reduction in Canada's foreign-exchange reserves or. if Canada has a surplus onits current and capital accounts, an increase in itsforeign-exchange reserves.

The balance of trade is the difference be-tween the dollar or money value of a country'sexports and imports of merchandise or of goodsand services. If a country exports more than itimports, it has a trade surplus; if it imports morethan it exports, it has a trade deficit. The balanceof trade plays an important role in determining acountry's overall balance of payments.(Source: After Crane, 1980. p. 17)

Recent balance of payments studies which haveconcentrated on direct conventional energy investmentforesee enormous capital requirements for energy de-velopment in the short and medium term. Indeed, wheth-er or not alternative energy developments supplant cer-tain conventional energy projects, future capitalrequirements will be massive. Energy investment mayvery well be the dominant component of fixed capitalinvestment over the next several decades.

Capital spending in the energy sector in 1979 was4.5% of Gross National Expenditure (numerically equal

1976 1977 ' 1978 ' 1979 ' 1980

Source: Bank ot Nova Scotia, 1980. p. 2.

to Gross National Product) or 22% of gross capitalformation. This is high relative to the resource boom ofthe 1950s, but capital spending in this sector has nottaxed the economy or financial markets since grosscapital formation in the economy other than for energyhas been weak in the late 1970s.

An energy investment boom may change the pic-ture markedly. Energy investment in the 1990s couldreach 9 % of GNP and current dollar energy spending in1990-2000 may increase by more than 40 times overthe 1970 level. Historical and projected energy sectorspending levels in current dollars are listed as follows(Waddington, 1979):

Billion Dollars/Year

19701979

1980-851986-901991-951995-2000

3.011.7

Annual Average

21.746.576.7131.0

Total cumulative capital requirements for energyinvestment for the period 1979-2000 are forecast at$1.4 trillion. Such seemingly awesome capital require-ments, if realized, will certainly place burdens on domes-tic capit'.l markets, and will necessitate vast foreigncapital inflows if the historical percentage of foreigncapital invesïment is maintained.

One forecast suggests that capital markets will pro-vide about 54% ($750 billion) of required energy invest-

104

ENERGY AND THE ECONOMY

ment dollars and the remainder will be raised internally,from operating profits. A significant proportion of thiscapital will come from foreign source's and thus will flowthrough Canada's foreign exchange markets and affectour balance of payments. Assuming the historical pro-portion of domestic to foreign capital, estimates indicatethat domestic capital markets will be asked to provideabout $400 billion and foreign sources $350 billion.Capital inflows to finance investment from foreignsources may account for nearly 79% of the projectedcurrent account deficit in 1979-1990; however, the fore-cast current account deterioration in the 1990-2000period may be such that inflows will cover only 67 % ofthe deficit. Thus, a problem may arise in the latterperiod — keeping interest rates moderate while at thesame time encouraging an adequate level of capitalinflow.

Capital Markets and Capital Investment

The capital market refers to the various mar-kets in which governments and corporations raiselong-term capital. The sources of such capitalinclude pension plans, insurance companies, trustcompanies and individual investors. The agentsthrough which these savers act include investmentdealers, stockbrokers, bond traders, underwriters,trust companies and banks, while the principalinstitutions include the bond market and variousstock exchanges.

Capital investment is the amount of spendingin the economy each year to replace worn-out andobsolete production facilities and to increase theproductive capacity of the economy. Public capi-tal investment consists of spending on new gov-ernment buildings, highways, schools, hospitals,and the like. Private capital investment consists ofspending by private and crown corporations onnew factories, mines, machines and equipment,housing, offices, hotels, refineries, power plants,railways, and so forth.(Source: After Crane, 1980, p. 46)

In the absence of effective conservation and practi-cal alternative energy forms, Canada could very well beplaced in the position of being forced to sell a portion ofconventional energy supplies to pay for the developmentof our oil and gas resources. Some level of export,particularly of gas, is likely to be both necessary andeconomically wise; however greater benefits may berealized from the sale of alternative energy technologiesthan from a higher rate of depletion of our conventionalenergy reserves.

Canada will not be alone in tapping the world'ssavings for energy development. Demand for capitalthroughout the world, in what may turn out to be twodecades of unprecedented energy development, willcontribute to the cost of money (debt servicing). Fortu-nately for Canadians, capital seeks out safe invest-ments. A well-planned program of energy resource andtechnological development together with a broad pro-gram of conservation is likely to create an investmentclimate in Canada which will be attractive to bothdomestic and foreign capital markets. Policies to reverserecent postponements in energy projects such as EssoCold Lake will thus become increasingly necessary if anadequate conventional/alternative energy system is tobe developed.

What benefits might one anticipate in Canada'sbalance of payments as a result of alternative energydevelopment? Beyond their direct impact on the bal-ance of trade, energy imports and exports have indirecteffects on international payments through their influenceon employment, investment, the exchange rate and themoney supply. Export revenues or import savings fromsome alternative energy forms may only affect the bal-ance of payments in the short run; others will havepermanent impacts.

• Alternate energy forms which replace imported oil willreduce by a corresponding dollar amount paymentsmade to foreign oil producers. Compensation pay-ments to oil importers will be proportionatelydecreased. Taken in isolation this will have the effectof relieving pressure on the national debt, buildingconfidence in the Canadian economy, improving capi-tal inflows and strengthening the Canadian dollar.

» If complete energy self-sufficiency resulting from con-servation and alternative energy development allows ageneral improvement in the economy, more capitalresources will be available for investment in large andsmall energy projects and for other purposes.

• Development of alternative energy technologies cangenerate export goods and services, and result inincreased exports and investment capital inflows. TheThird World may be a particularly important marketfor Canadian energy technologies suited to decentral-ized energy systems.

• Development of alternative energy technologies athome will reduce the need to import them. Faiiure tomove ahead aggressively in developing alternativeenergy technologies will result in falling behind the restof the industrialized world in the energy technologymarket.

• A strong Canadian economy which is energy self-suffi-cient may allow more economic independence andenable this country to pursue policies to reduce itsdependence on foreign capital.

105

• Alternative energy technologies may not have thepolitical or strategic problems associated with theexport of nuclear technology.

Canada has the potential to achieve energy self-suf-ficiency almost êcross the board in the next decade.This could occur through rapid development of frontier

: oil resources, the tar sands, alternative energy forms andby aggressively pursuing conservation. Studies under-taken by the Committee indicate that a range of benefitswill be derived from achieving petroleum self-sufficiencyin particular. They may, however, require ten or moreyears to become fully realized in the economy.

In assessing the balance of payments effects of apolicy of energy self-sufficiency, it is important to distin-guish between long-run and short-run consequences.The more self-sufficient in energy Canada is, the morelikely it is that the current account balance will bëstronger towards the end of the decade although duringthe interim period, spending on foreign goods out ofincome derived from energy investment could weakenthe current account balance. {Income from direct andindirect employment associated with developing conven-tional and alternate energy resources will be spent byworkers on imported as well as domestic goods andservices.) Furthermore, the achievement of self-sufficien-

cy in all energy forms will help insulate the Canadiantrade balance from the effects of high world oil prices. Inthe absence of the development of major conventionaland alternative energy projects, our trade balance couldbe much less favourable and much more volatile.

Estimates indicate that complete energy self-suffic-iency would strengthen the Canadian dollar in the longrun. Nëvertheless7 as with the trade account balance,the economic activity which would be associated with adrive toward self-sufficiency in the early part of tiiedecade could weaken the dollar. Unfortunately, this maybe part of the cost of achieving self-sufficiency inenergy. This might not be the case, however, if Canadareceived large capital inflows to support energy develop-ment. Self-sufficiency would also protect this countryfrom world oil price shocks. A strengthened dollar wouldmean reduced import costs towards the end of thedecade, although too strong a dollar would dampen

export sales. - i . - _ ^ -_i--— —_- ; —.jr_h;: —--_

~-- The overall implication of energy self-sufficiency isdifficult to discern with clarity. At the very least, how-ever, this brief discussion has demonstrated the com-plexity of the international sector of our economy withrespect to energy. Failure to curb our costly petroleumimports will certainly result in highly undesirable energytrade and current account deficits in the near future.

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Energy And Employment

Changes in the intensity of commercial and industrialenergy use together with shifts in energy consump-

tion patterns have implications for employment inCanada. While some have advocated the developmentof alternative energy sources and the promotion ofconservation for the express purpose of creatingemployment, others regard the employment effects ofenergy policy as secondary. The Committee believesthat a more thorough understanding of the relationshipbetween energy and employment is essential and thissection discusses some of the issues involved.

Full employment is an important target in developedeconomies. Conflicts arise, however, because fullemployment is only one of many societal goals: control-ling inflation, promoting industrial development andequitable distribution of income among people andregions, and achieving energy self-sufficiency are exam-ples of others. Unfortunately, the simultaneous attain-ment of these objectives continues to elude both gov-ernments and the natural workings of the economy.

Our economy depends upon plentiful energy. Withenergy being a vital input to production, changes in itsuse, supply, price and type influence market reactionsand, therefore, the employment of labour. Beyond this,government policy and altered consumer tastes con-cerning energy use can also affect employment. Theseinteractions are discussed here.

Increased economic activity generally has the effectof increasing the demand for labour. Increasing energyprices tend, however, to have a depressing effect onlabour activity because as the costs of production rise,output cutbacks generally follow. Nevertheless, even inthe short run, labour is often substituted for energy whenthe price of the latter rises. This may well result in a netpositive effect on overall employment even if outputlevels fall. In the longer run, if industries can substituteother inputs for more expensive energy, output levels,and consequently employment, may not necessarily fall.If, on the other hand, the longer-run effect of higherenergy prices is reduced economic growth, thenemployment may decline simply because aggregate pro-ductive capacity is reduced.

At the level of the consumer, other goods will besubstituted for energy as its cost increases. For

instance, people will insulate homes if this is cheaperover time than spending more on space heating. Sub-stituting insulation for energy stimulates the insulationindustry and bolsters its associated employment. Thereis evidence to support the view that the positive effectsof energy-saving options on labour more than offsetlabour losses in the replaced energy supply industries.This is not to say though that disruptions within the totallabour market will not occur.

In the auto industry we are witnessing sales reduc-tions, production cut-backs and employee lay-offsoccurring at least partially in response to changes in thedemand for energy. The main cause of the demandchange in Canada though is probably attributable torising costs for automobiles themselves and to changesin consumer tastes, because the real price of domesticgasoline has remained relatively stable over the lastdecade. Regardless of whether the reduction in demandfor the typical, large North American automobile is inresponse to the rising cost of fuel, to the cost of the caritself or to preference changes, adjustment is hinderedby the inflexibility of the automobile production process.Such rigidities lead inevitably to employment losses.

It is possible to substitute labour for energy intransportation by walking and bicycling, or it is possibleto produce vehicles very labour-intensively (as is done inRolls Royce production), but these solutions are costlyin time, convenience and dollars.

On the other hand, if energy prices continueincreasing, the energy supply industries will be stimulat-ed and employment in that sector will expand. More oiland gas wells will be drilled, additional tar sands plantswill be considered and the development of alternativesto conventional oil will be encouraged.

Decentralized energy options lead to regionally dis-persed benefits in employment. For some areas the netemployment benefits are clearly positive because anindustry develops where no activity existed before. Thisimproves local economic conditions and stimulates localgrowth. The overall effect, when total Canadian employ-ment effects are weighed, is not so clear however.Regional employment gains must be measured againstreal income losses if the decentralized industry providesenergy which costs more than energy obtained from a

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centralized source. Employment gains in one region, orin one market sector, will be matched to some extent bylosses elsewhere.

The encouragement of the conventional energysector also has a local employment impact when a largeproject is undertaken in an area which does not alreadyhave the population or the infrastructure to supportdevelopment. While it is true that the local economytemporarily benefits from the growth and income gener-ation resulting from the project, severe and costly dis-ruptions can also occur. The costs of sudden and specif-ic labour force demands can spread across the countryas the need fi • -'nose workers skilled in particular tradesrises and wages are pushed up — demands in one areaaffect the labour force balance and employment costs inother regions. There are also labour skill implicationsbecause the demand may exceed the supply of specifickinds of labour.

Labour is not perfectly mobile across Canada andnot all workers have the skills which are in demand.These two problems contribute to the disruptions andcosts associated with large, centralized energy projects.After the "boom" in local growth associated with theconstruction period, there is the danger of a "bust"when the specialized workforce moves on. The demandstrains associated with the bunching of large projectscan also exacerbate inflation.

The appeal of decentralized energy supply isobvious — the labour market costs associated withlarge projects disappear. The benefits of the economiesof scale which accrue to large projects are lost withdecentralized development, however.

Well-planned, large projects can be economicallystimulating during recessions. The tar sands plantsplanned for the late 1980s can be expected to coun-teract any recessionary tendencies existing then, andthe benefits of improved economic activity will undoubt-edly spill over to the labour market.

Energy policy affects employment by changing thepattern of market activities. If nonconventional energysupply is encouraged, employment gains are promotedin these new industries but moderated in conventionalenergy supply industries. The net employment effect ofsuch a policy is consequently unclear. The effects ofenergy conservation policies are similarly complex.Research done on the employment effects of conserva-tion policies indicates that initially there are greateremployment gains in conservation industries than thereare employment losses in energy supply industries. Thenet gain, however, may be in lower-wage jobs. There issome doubt that long-run growth can continue with astrict energy conservation policy.

Tax incentives which promote activity in thepetroleum industry are really an indirect subsidy whichenhances employment. Similarly, incentives for the de-velopment of alternative energy sources and technolo-gies can stimulate employment. Price setting can havethe same effect — regulatüns^.vhich "naintain highenergy prices (such as those put into effect in the 1960sfor the Western Canadian oil industry) encouragedgrowth and stimulated employment. On the other hand,enforcing low energy prices can depress activity andtherefore employment in the energy sector.

Government employment policy has a role to play inimproving labour market flexibility. The better-preparedthe labour force is to respond to higher energy prices,increased alternative energy supplies and energy-effi-cient technologies, the better-off all Canadians will be. Itis thus incumbent on government and industry to identi-fy future skiJI requirements, to encourage and undertakenecessary training procedures, to aid in making labourmore mobile and to attempt to reduce occupationalbarriers. This applies to the conventional energy sector,the evolving alternative energy supply industries, theindustrial sector which will be providing more energy-saving technologies and, indeed, all industry. In anyevent, coping with employment effects, not aiming atcreating Jobs, should be the major employment concernin formulating energy strategy.

As the attitudes and goals of society change, con-sumers will alter the types of services they demand. Withenergy efficiency and energy self-sufficiency gainingprominence at a time in Canada's economic develop-ment when concern about quality of life is becomingmore and more important, the kinds of goods andservices which are demanded will change to reflectthese goals. These changes will be followed by thealterations in production made to meet consumerdesires. As this latter development progresses, employ-ment patterns will also be affected. Industries likely toexpand will be those whose products complement alter-ing tastes.

Canada's economic structure is undergoing modifi-cation which extends well beyond the energy sector.Employment patterns, labour participation rates and thewhole industrial structure are changing as the economyand society in general evolve. The high-technology revo-lution, for instance, is likely to make our industrial sectorless energy intensive than it is now. The growing empha-sis on the service sector will also reduce energy intensitywithout a reduction in labour intensity. Job sharing, thesubstitution of communication for transportation, andsimilar innovations will lead to energy/output relationswhich are based on very different circumstances thanthose prevailing today.

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Incentives

Economic conditions in a market economy may notbe conducive to an adequate or time/y develop-

ment of alternative energy forms and systems. The roleof government in creating appropriate incentives foralternative energy research, development and commer-cialization is discussed in the following pages. The prob-lems with and the effectiveness of subsidies aimed atproducers and consumers of energy and at potentialconsumers of conservation technology are dealt with inthe context of market and implicit (social) energy prices.

The recommendations in this Report are based onthe realization that while the present energy situation isundergoing change it is not in a state of crisis. It iscertainly not imperative to map out our future under"war-time" conditions. Canada does have diverseenergy options and although we must take action now.we do have the opportunity to consider the cost implica-tions of our choices. Since incentives cost money, wemust take the time to consider the cost implications ofour best options' There are unique circumstances wherespecific government involvement is appropriate and inthis section we set out some of these special featuresand indicate the kind of government response that wethink they require.

In mixed economies the public sector plays the roleof influencing market decisions for the promotion ofsocial well-being. The maze of taxes and subsidieswhich influences energy consumption and productiondecisions in Canada today is clear enough indicationthat government intervention is not only complex butextensive as well. Since the market mechanisms in oureconomy still produce less than perfect results in manycases, one could advocate stepped-up intervention injust about every market. Nonetheless, there are thosewho also argue convincingly that the government shouldleave the market to itself because they have completefaith in the "competence of markets and the incompe-tence of administrators." Unfortunately, extreme atti-tudes of this sort are rarely helpful in the resolution ofproblems. Striking a balance between these two views isprobably the best approach in the formulation of analternative energy policy.

If the economy functioned perfectly in fhe use of aliresources (natural resources, capital and labour), then

The Canadian Economic System

A mixed economy is an economic system likeCanada's where both the government and theprivate sector have important roles to play Bothprivate and public corporations exist and the gov-ernment intervenes through the use of laws, regu-lations and other methods which modify the work-ings of the market in favour of protecting thepublic interest

there would be little need for government incentives topromote energy efficiency or the commercialization ofalternative energy sources and technologies — correctmarket signals would lead to resource allocations whichmaximize society's well-being. This would be truebecause producers and consumers would make deci-sions which take into account the total social implica-tions of their actions. For example, car drivers wouldperhaps make different decisions about the amount ofdriving they do if they were to bear the cost of theenvironmental pollution they cause by driving their cars,the ultimate cost of rscycling their cars, and if they hadto account for the increase in market power that OPECgains to raise future prices when more and more import-ed oil is demanded today. Individuals do not consider allof these costs simply because everybody in societyshares them: those who impose the burdens do not paythe full cost personally If we could add up all thesecosts we would arrive at the price for energy whichaccounts for all the costs to society of oil productionand consumption (the socially optimal energy price).

The energy market does not account for all costsand this inadequacy has not been overlooked by thepublic sector. In fact, there is a complex and detailedincentive and regulatory framework already set up in theenergy market. The list of available government toolswhich can. and do. influence energy production andconsumption decisions is a long one. It includes grants;subsidies; income tax credits: income tax deductions;low-cost loans: guaranteed loans; taxes on fuel; priceceilings; price deregulation; and protective tariffs, foname only a few. Programs and incentives already over-

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lap, real costs are often hidden and the effectiveness ofall the measures is unclear. To further complicate thepicture, a new consumer incentive program for switchingoff oil has recently been announced. The fact that thisprogram is only partially described adds to theconfusion.

The Socially Optimal Energy Price

Canadian consumers do not pay the true cost(the total cost) of oil. The true cost is higher thanthe price in Canada for a variety of reasons. (1)The relatively low price of oil discourages produc-tion and encourages consumption. Ideally, there-fore, if it is best from a soc;a/ perspective to. ;discourage consumption and encourage produc-tion, then a higher oil price would be "better" thana lower price. We recognize, of course, that politi-cal and institutional realities also introduce impor-tant limiting factors into oil pricing arrangements.(2) By increasing our oil dependency today, andtherefore our imports, we give OPEC more powerin the future to raise the world price of oil that wewill eventually have to pay. This is one part of thereal cost of consuming more today. (3) Acid rain,the production of carbon dioxide and the numer-ous emissions which result from burning fossilfuels impose environmental costs.

Theoretically, by adding up all of these vari-ous factors, what is called a socially optimalenergy price can be determined. The accountingtask itself is in reality impossible to perform. It isclear though that if oil is substituted for by alterna-tives that do not embody the real costs associatedwith oil consumption, then the value of the substi-tution is at least equal to the cost which is avoid-ed. For the United States, the Department ofEnergy has estimated that the socially optimalprice for oil in the U.S., when only some costfactors are accounted for, is about S3 per barrelabove the world price; while in Energy Future it isestimated that the socially optimal price was be-tween $35 and $85 in 1979 even when somesocial and political costs were excluded (Sto-baugh and Yergin, 1979).

The task of finding the appropriate mix of incentivesand regulations is indeed a difficult one. Even woreelusive is the philosophy concerning whether the marketshould be interfered with and why. This philosophy mustbe clear, so that the purpose of programs is consistentand clear.

Barriers to alternative energy commercializationobviously exist. Most agree, however, that when an

Subsidies

Subsidies are indirect or direct payments usu-ally made by governments to reduce the cost ofpurchases to consumers or the cost of productionto producers. Consumers receive an indirect sub-sidy on pil cdnsumptiórirwhën they pay less thanthe import cost of oil. the direct subsidy on oilimports is financed by all Canadians through gen-eral tax revenues, by oil producers through the oilexport tax and by oil consumers through thePetroleum Compensation Charge. Oil producersalso finance (through foregone earnings) an indi-rect subsidy ön domestic oil consumed in Canadabecause they receive less for their oil than theycould receive on the world market. The indirectsubsidy facing consumers is therefore also anindirect tax (negative subsidy) on oil production

: because revenue is indirectly transferred from pro-ducers to consumers. Alternative energy produc-tion is inhibited because consumption of its outputis not subsidized to the same extent.

alternative is competitive with the socially optimalenergy price (or the international price) it should becommercialized. But what is the incentive to innovate orcommercialize in Canada when energy services can beconveniently derived from oil at a subsidized price ofabout $20 per barrel? Although the current commitmentis to higher domestic prices, if we want more alternativesto come on-stream quickly, it is evident that governmentincentives will be necessary.

In a country where the domestic price of oil is stillsubsidized, the best incentive government can provideto alternative energy sources is one which subsidizeseach new unit „of alternative energy which replaces oil.The subsidy should, ideally, be equal to the differencebetween the regulated oil price and the socially optimaloil price. This constitutes an output subsidy.

When the use of alternatives is foregone, importsare consumed instead, markets remain undeveloped,gains in achieving domestic security of energy supplyare foregone, and continuing pollution from oil consump-tion results. In the case of conservation there is goodargument for rewarding the saving of a barrel of oilbecause that barrel need not be imported at the worldprice and national security potentially threatened.

With an output subsidy, new, more expensiveenergy sources would likely be developed because pro-ducers would effectively receive a price competitive withthat of oil, and as domestic oil prices increased theoutput subsidy could decrease. Consumers would notneed to receive energy incentives directly but simply

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ENERGY AND THE ECONOMY

could make their decisions based on market prices.Unlike tax credits, loan guarantees and loans at thegovernment's borrowing rate, direct output subsidies aremuch more visible. Such incentives, therefore, are moredesirable because they do not mask the real cost ofincentives to society.

Output Subsidy — A Technical Definition

A per unit subsidy on alternative energyoutput which is equal to the difference betweenthe domestic price of oil (Pd), and the import cost(P*) (or, ideally, the socially optimal price), lessany oil input Subsidy (S1), theoretically will inducethe same amount of alternative energy supply aswould occur without the oil consumption subsidy.When the cost of production Ms subsidized,-theprice of the alternatives could be set competitivelywith that of oiL

Output subsidy/unit = P * - P a - S ' .

The output subsidy must be based on areplacement value for oil in actual usage. Thesubsidy must further be net of any subsidiesalready received.

Ideally, the best incentives would not discriminateamongst energy supply technologies and hence theinvestor would be afforded the opportunity of choosingthe most promising alternative. It is best to treat allsources equally because restricting the range of optionsprejudices the market and excludes innovation. Forcinga narrow view of opportunities would not be in our bestlong-term interests. Rather than managing commerciali-zation of new technologies, the provision of output sub-sidies promotes commercialization directly. The Com-mittee, however., has identified some options which arebetter than others in terms of attaining long-run energygoals. For this reason, and because funds are inevitablylimited, the choice of those options which should qualifyfor output incentives should be managed to a certaindegree.

In the event that output subsidies are provided andthe private sector is still not willing to invest in certainoptions, then a very strong argument must be madebefore tax dollars are invested. Private investors willcommit their funds only when they believe they will yielda positive return. The rule for public investments shouldbe no different, although "returns" in the public sectordo not have to be measured in commercial terms alone.Those options which are clearly good from a socialperspective but which are not favourable ones from thepoint of view of the private sector would require furtherincentives.

Government-supported demonstration projects area good choice when the project necessary to identifytechnical and cost aspects must be of commercial scaleand when no private firm is willing to undertake it alonebecause the information gained will be free to others. Itis important that the relevant technology be well in handbefore government becomes involved since a failure willprovide a major disincentive to further market develop-ments. In cases where the private sector is involved injoint demonstration projects, competitive bidding forproject involvement would encourage efficiency throughminimized costs. The commercialization process wouldbe facilitated and bottlenecks in implementation wouldbe minimized with private sector involvement and there-fore it should be encouraged.

Governments should not, however, get involved indevelopment which would have taken place without it asthis would constitute a waste of government funds. If thebarriers to development are related to legislative orinstitutional problems (such as lack of "rights to light" orinadequate building codes), then the solutions involveremoval of these barriers, not subsidization of the pro-duction or consumption of the alternative technology. Inthe same way, if lack of information or m.arket ignoranceis the commercialization barrier, subsidization is inef-ficient but education and instruction programs areappropriate.

Efforts should be made to reduce the amount ofuncertainty regarding future government policy becausethe more uncertain future events are made, the morerisky are investments. Policies regarding market inter-vention and energy prices must be as clear as possible ifappropriate responses are expected of investors w'hodepend on their impression of the probabilities of futureevents when making investment decisions today.

Commercialization incentives, regulations and insti-tutions should be sensitive to changing circumstancesand be altered accordingly. A variety of factors contrib-ute to the changing appropriateness of the energy mix.As energy prices change, the economic viability of alter-natives also changes. As technological change takesplace the economics again improve.

It is necessary to improve the consistency of thecalculations of the oil-saving value of conservation andenergy efficiency gains if subsidies are to be applied inthe most efficient way. This is where government RD & Dhas a definite role to play. Energy audit requirementsand standards will also be necessary if the energy savingopportunities of retrofit and efficiency measures are tobe accurately quantified.

Input subsidies are those which cover the cost ofinstalling particular technologies of specific dimensions.They therefore dictate the design and operating choicesavailable to energy producers and consumers and

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exclude choices which may be better. In an evolvingmarket, too much uncertainty exists to enable any onepolicy to determine the best opportunities at all times. Ifthe government adopts only input subsidies we run therisk of locking ourselves into overly costly alternatives.Subsidies which are related only to cost tend to encour-age preliminary funding requests which underestimateeventual needs. Also, when specific emphasis is on alimited set of options, attention is detracted from othertechnologies and sources, innovators in the excludedtechnologies are implicitly punished for their foresight inthe same way that newly instituted incentives tend toreward only the laggards who wait for public funding.

There is a valuable role to be played by governmentlead agencies which bridge the transition from R & Dthrough demonstration to commercialization. Suchbodies would have the mandate of identifying privatesector applications and providing information. Theycould also ensure that R & D does not take place in avacuum away from the economy. This role could poten-tially spill over to involving the private sector moreactively in R & D activities. Although it is appropriate toinvest in as many options as possible at the R & D level inorder to provide a "safety net", it would be the job ofthe lead agencies to identify the smaller set of optionswhich are most promising to render them ready forcommercialization.

The lead agencies would ideally work on a regionalbasis so that developments could be matched to region-al needs and opportunities. But there is a need to avoidreplication of the work being done by various depart-ments of the Federal Government, other levels of gov-ernment and the private sector. It is not always neces-sary to create a new agency but it is necessary toidentify the coordinating role of one group so that it hasa well-defined responsibility to ensure that efforts andmoney are not wasted.

To act as a lead agency for the alternatives will beup to the newly-formed government agency Canertech.In its role as an entrepreneurial organization, Canertechwill bridge the gap between RD & D and establishedindustry. It intends to take an equity position in thecompanies assisted to generate a cash flow and tobecome self-sustaining.

Canada should continue to develop its alternativeenergy supply policy in view of changes in the rest of theworld. Changing energy supply patterns are globalevents which contribute to changing future needs anddependencies everywhere. Since domestic industry

depends on external markets, there should be domesticdevelopment which answers the need for providingexport opportunities in the future. Canadian technologyand energy supplies will be important earners of foreignexchange if they are sold in other countries. Incentivesto promote alternatives which may not necessarily bebroadly applicable in Canada, such as wind technology,may be beneficial if they make important contributionsto energy supply elsewhere. Intercountry cooperation inongoing energy projects in fusion and coal technologies,for instance, may also be of eventual importance forCanada's balance of payments and should therefore beencouraged.

Since the energy policies of other countries caninfluence Canadian circumstances, there will be certainsituations in which the protection of Canadian industriesis appropriate. The incentives available to the Americansolar industry, for example, have led to that industryhaving an advantage over its Canadian counterpart. Forthis reason, protective trade barriers to the importationof American solar equipment were instituted to protectthe young Canadian solar industry. Tariffs and othertrade barriers do not go to the root of the competitionproblem: they force Canadian consumers to pay morefor Canadian equipment: they delay oil substitution; andthey cause Canadian solar equipment to remain non-competitive internationally. Output subsidization, on theother hand, is efficient because it encourages the sameproduction as would be the case without a regulateddomestic price. It is a temporary subsidy which isintended to diminish as domestic oil prices climb tohigher levels. With such a program trade protection isless necessary; consumers are given more choice; pro-ducers are forced to compete, thus encouraging innova-tion and a more viable industry; the danger of tariffretaliation is reduced; and oil import substitution isaccelerated.

Pressure on government to encourage alternativeenergy supply is growing but the efforts usually requiredto prove government is actually acting for society'swelfare involve higher government expenditures andspecific new programs. If subsidization of alternativeenergy and technology is inevitable then we must try toget as much as possible for the money spent. It isCanadians who must pay taxes to pay the bills and it isthe government's responsibility therefore to spend themoney wisely. Taxpayers are obliged to support what-ever the government decides to subsidize. Unlike energyconsumers who can avoid higher costs by restrictingtheir consumption, taxpayers have no choice. Ifresources are wasted all Canadians lose.

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Introduction

The Committee realized early in its study that thecomplex subject of energy would have to be

broken down to make it manageable. For instance, thesun is clearly a source of energy but is coal liquefaction?No, the latter is a technology which transforms a con-ventional energy source, coal, ]nto a commodity such asmethanol which has the potential to play an importantrole in a new Canadian energy mix._This technology canbe further qualified as alternative because if has notpreviously been exploited commercially in this country. Itis not a new technology since coal liquefaction facilitieshave existed since before the Second World War. Itdoes, however, represent a new and alternative optionfor Canada.

Other subjects for discussion could not be termedeither alternative sources or alternative technologies,hydrogen and electricity being examples. We have notviewed hydrogen as a source of energy since energymust be used to produce it and to concentrate it.Hydrogen does, however, store energy and can beexploited as a fuel to perform useful work. If, for exam-ple, energy were produced in a tidal installation and notimmediately consumed, it could be stored in the form ofhydrogen (through electrolysis which uses electricity tobreak water molecules into hydrogen and oxygen). Thehydrogen could then be transported in liquefied or com-pressed form or moved by pipeline. Thus one can thinkof hydrogen as an energy currency which can be"spent" at any time to provide useful work. Electricityalso acts as a medium of energy exchange or an energycurrency, in that it can be generated in one location andperform useful work elsev,here.

For the purposes of this Report, the word currencyhas been adopted to characterize those commoditieswhich are neither energy sources nor energy technolo-gies. They are intermediaries between the source fromwhich energy is derived and the point where energy isconsumed. Energy currencies are often known as fuels,but the term fuel normally refers" to combustible ma-terials and therefore does not aptly describe electricity.Ah energy currency is thus a medium of. energyexchange which can be spent in return for work. We seea variety of alternative energy sources, currencies andtechnologies being exploited in concert to produce atechnically, economically, environmentally and sociallyacceptable energy mix for Canada in the future. Thesealternatives are briefly described in succeeding parts ofthis section in order to acquaint the reader with therange of possibilities considered by the Committee andto provide basic information about some energy pos-sibilities which may not be familiar. Each subsectiondescribes the nature of the source, currency or tech-nology, lists some of the advantages or difficulties whichmay accompany its exploitation, discusses developmentactivities on the national and international scene, andsuggests where Canada should go from here concerningeach option.

We do not claim to have exhausted all the possibili-ties for study. Indeed, such a task would be unendingbecause technology is continually evolving and it isdifficult to predict where research will lead. We thereforeview the Committee's work as one step in a continuingprocess of evaluating Canada's energy opportunities.

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strategy and we agree wholeheartedly with this conclu-sion. It is, in fact, this conviction which has led us to giveconservation a prominent position in our Report, eventhough it was not specifically mentioned in our terms otreference.

It is one thing to recognize and accept that conser-vation is of uppermost importance but it is quite anotherto suggest what specific steps should be taken to ensurethat we exploit this resource. To undertake to do this inthe context of this Committee's already complex reporton alternative energy would, we feel, greatly understatethe importance which this subject carries. Because con-servation is not a concern of the Federal Governmentalone, it deserves and requires a detailed study whichlooks at this subject at all levels of jurisdiction.

RECOMMENDATIONThe Committee recommends that a detailedstudy into all aspects of energy conservation, inall sectors of the economy, be undertakenimmediately.

There have been many studies dealing wKh individu-al conservation technologies and studies of industrial,residential or commercial energy conservation. Thiswealth of information needs to be pulled together andthe study we propose could well carry out this function.The study should be aimed at the needs of policymakersand should offer recommendations on specific policiesand standards which could be implemented. Regionalvariations in the supply and demand for energy mustalso be accounted for as no single policy will be suitablefor all regions of the country nor for all sectors of theeconomy. The study should also differentiate in somedetail between capital and operational costs so that aclear picture of the payback from conservation initiativesis obtained.

While we have not undertaken a detailed examina-tion of conservation, we have been exposed to a widevariety of concepts, proposals and opinions on thissubject. We therefore present the following observationsand comments as examples of the information we havereceived and the opinions we have formed, knowing fullwell that we have only touched briefly upon the subject.

To take complete advantage of the conservationresource, two approaches must be taken: wastefulnessmust be discouraged and the efficiency of all our ener-gy-consuming activities must be improved. The firstapproach needs no explanation; the second requires usto begin thinking of our daily activities in terms of theamount of energy they consume. In short, we must buildenergy efficiency into products, processes and life-styles. We have to develop a sense of energyresponsibility.

Initially, progress in conservation may be slowbecause the market for energy and energy technologiesis ineffective at signalling appropriate levels of invest-ment in conservation — people do not have a feeling forthe real costs of foregoing conservation measures.Homeowners, for example, may react negatively to theinitial price of insulating their homes and fail to take intoaccount the real savings such an investment could gen-erate over a period of years. Programs are needed toprompt people to make the correct energy decisions.For instance, Hydro-Quebec has recently introduced aninnovative program to promote home insulation. It isdesigned to make the initial capital cost — a barrier inmany cases — disappear. Under its terms, a home-owner obtains a loan from Hydro-Quebec to insulate hishome and repays the loan over five years by paying thedifference between pre- and post-insulation heating bills.The customer is not faced with a large capital outlay andfor five years simply continues to pay his heating bill ashe would have otherwise without the added insulation.Thereafter, his billing drops to the new level reflecting hisenergy saving. We see no evident reason why a similarprogram could not be extended by the Federal Govern-ment to small businesses and industries with limitedcapital resources.

Unfortunately, there is not a well-organized conser-vation lobby in Canada and, as advertising is over-whelmingly directed towards convincing people to buyand consume most products, this message is reflectedin our attitude towards energy. Thus leadership in pro-moting the conservation ethic must come from Govern-ments, which have only recently begun funding andencouraging energy conservation efforts. The Federalinitiative has begun well and the Committee recognizesthat Canada's public education program in energy con-servation has been widely applauded. Despite this, thereremains room for improvement and greater public andgovernmental commitment to conservation is imperative.With these concepts in mind we now consider some ofthe conservation suggestions which the Committeereceived from various sources.

Electricity will contribute a larger share of end-useenergy in Canada in the future, and this energy currencyshould be wisely managed and spent. Two measureswhich would help ensure that this is accomplished arelisted here.

• The current practice of charging less for higher levelsof electrical use should be discontinued.

• Utilities should consider rate structures which encour-age the use of off-peak electricity.

The transportation sector is one of the largest con-sumers of energy in our economy and Canadian driverssoem as reluctant as ever to abandon the convenienceof private automobiles. This is not surprising as our

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SOURCES, CURRENCIES AND TECHNOLOGIES

cities, towns and villages are built around personaltransportation. A large potential exists, however, forenergy economizing in moving goods and people.Automobiles are becoming lighter, engines are becom-ing more efficient in their use of fuel, auto bodies arebeing made with improved aerodynamic efficiency, tireswith less rolling resistance are being developed — theseare some of the design approaches already generatingenergy savings and much more can be accomplishedah. ,g these lines. More innovative changes, such asincorporating flywheels into vehicles, may produce simi-lar benefits in the future. Energy savings can also berealized through improved management of vehicularflows, as the following examples suggest.

• Although existing speed limits are acceptable andpractical for this country, they must be enforced sothat vehicles are driven at speeds which make effi-cient use of fuels.

• Stop signs should be replaced by yield signs whereversafety permits to reduce energy-wasting stops andstarts. Similarly, whenever possible, traffic lightsshould switch to flashing amber, instead of continuingthrough a full amber, red, green cycle when trafficvolume does not warrant it.

There are significant savings to be realized bymanufacturing industries as well. This sector was builtpredominantly in an era of low-priced energy and, as aresult, it was often inefficient in its use of energy. Inresponse to a call by the Federal Government in 1974for an aggressive and voluntary program to cut energydemand, the industrial sector established 15 conserva-tion task forces. Each task force represented one seg-ment of the industrial sector (pulp and paper, chemicals,food and beverage, industrial minerals and so on) andeach set its own goals. Industries responded veryfavourably since conservation quickly paid off for themand results have been encouraging. Some sectors mettheir 1980 targets ahead of schedule and are formulat-ing new goals for even greater savings. Although this isonly a start and a sustained effort will be necessary, theCommittee is encouraged by the early success of thesevoluntary activities. We would like to see this initiativecontinue to ensure that:

• Industrial processes are redesigned, changed orretrofitted when and wherever feasible to reduce theamount of energy they consume.

• Industries place added emphasis on maintaining ma-chinery at levels of maximum energy efficiency andreplace "extravagant" energy users with new andenergy-efficient equipment.

• Every effort is made to utilize what is now consideredwaste heat generated in industrial processes.

Since a large amount of Canada's energy is used inheating and lighting buildings, there is significant poten-

tial for energy savings here as well. In this sector,however, the message of conservation should beaccompanied by information concerning the concept ofpassive solar design.

RECOMMENDATIONAil levels of government should cooperate inensuring that architects, builders and contrac-tors learn and practice energy-efficient designand construction. In particular, these peopleshould be made aware of the energy-savingbenefits which result from the passive use ofsolar energy.

Passive solar design incorporates a number of ener-gy-saving features such as insulated night shutters,double or triple glazing, removal of most north- andwest-facing windows, the use of windbreaks and/orearth berms (embankments) to the north and west ofbuildings, or building into the south face of a hill.

Other measures to reduce heat loss, which apply toboth ordinary and passive solar buildings, includeadding extra insulation and improving airtightness. It hasbeen demonstrated in Canada that these two measures,plus using a larger area than usual of south-facingwindows, make it possible to construct houses in whichenergy consumption is reduced by 80 to 90% com-pared with similar houses built to existing standards. TheCommittee had the opportunity to visit the most well-known of these energy-efficient homes, SaskatchewanConservation House, during the course of its cross-country hearings.

Demonstrating that these levels of energy savingare possible was an important first step, but whatpeople really want to know is, "Can it be done cost-effectively?" Unfortunately there is not yet a great dealof data on the costs and benefits of energy-efficientpassive solar design due to the limited number of pas-sive solar homes and the minimal amount of monitoringwhich has been done on those which are in place.Nonetheless, there seems to be sufficient informationavailable to make at least preliminary estimates.

A recent study done tor the Department of Energy,Mines and Resources (Gough, 1980) performed such ananalysis. It concluded that in new construction the mostcost-effective strategies, in order of priority, were to (1)relocate as much as possible the normal window area ofa house on the south wall; (2) increase the insulation inbuildings by about 50% beyond the 1978 NRC stand-ards; and (3) either further increase thermal specifica-tions or further increase the south-wall window areabeyond redistribution.

The conclusions of this study agree with testimonyheard by the Committee. Energy-efficient housing canuse standard building materials and techniques, so the

119

technology is available now. Furthermore, it appearsthat substantial energy savings can be achieved within areasonable payback period for the added investment. Ifall of these conclusions are correct — and we have noreason to believe that they are not — then why is suchhousing not being constructed on a much broader scalein Canada today? Several Committee witnessesdescribed barriers to the construction of energy-efficienthousing and certain factors were identified time and timeagain. The proposed energy conservation study willperhaps identify other obstacles which are not nowapparent.

Economics play a very large role in determining theadoption of energy-conserving construction _ practicesand the inclusion of passive solar features. The initialcapital investment can be justified bysavingsin energycosts over time; however, the consumer faces the prob-lem that the return on his investment may not be real-ized for as fnuclf as 10 or 15 years. Certainly the currenthigh rates of interest for loans and mortgages determany would-be "conservers" from making such aninvestment. Moreover, the uncertainty of future energyprices clouds the issue of the length of the paybackperiod.

A person's eligibility for a mortgage is based on acalculation of the proportion of his or her monthly salaryavailable to make payments. With an energy-efficienthouse and the resultant lower energy costs, a personwould have more money available each month — per-haps enough to covar the increased mortgage chargesoccasioned bv adding the cost of tne conservationmeasures to the mortgage. This suggests that themethod of calculating mortgage limits shouid bechanged to take energy saving into account. This wouldseem to be a particularly appropriate measure for theCanada Mortgage and Housing Corporation (CMHC) toconsider when funding non-profit housing.

CONCLUSIONFederally-financed housing provides an excel-lent opportunity for the Government to demon-strate the benefits of conservation and passivesolar design.

RECOMMENDATIONThe Committee urges that Federally-financedhousing incorporate energy-conserving andpassive solar design in order to demonstrate itsbenefits.

In this regard, the Committee welcomes theannouncement in the 1980 National Energy Program of

a $6 million measure to promote energy-efficient hous-ing through workshops, training programs, and thedesign and construction of 1,000 energy-conservinghomes across Canada. If this program were extended tosocial housing, it would provide the added benefit ofshielding those in need of such homes from increasingenergy costs.

~ The NEP initiative provides a chance to gain much-needed practical experience in the operation of passivesolar heating systems. Such systems are by no meanssimple and there is a complex relationship betweenenergy collection, storage and "conservation in thesebuildings. Unless these elements are properly balanced,a passive solar house can be a very uncomfortableplace to live in.

Another barrier to the widespread use of energyconservation measures and passive solar systems is thelack of suitable building standards. In October 1980 theten~provincial Energy Ministers called on-the FederalGovernment for improvements in the National BuildingCode (NBC) to ensure that energy conservation featureswere included. This call for action followed the publica-tion of a set of building standards known as Measuresfor Energy Conservation in New Buildings (1978). As withthe NBC however, adoption of these measures by theprovinces is voluntary and, as of the end of 1980, notone province had adopted the new standards. TheDivision of Building Research at the National ResearchCouncil carried out a study to determine why none ofthe measures has been adopted and the major reasonwas found to be the lack of inspectors qualified tooversee the new measures. The cost involved in retrain-ing building inspectors would have to be borne by theprovinces and this illustrates the type of jurisdictionalproblem facing the Federal Government in its attemptsto promote energy conservation through the buildingcode.

Several witnesses suggested to the Committee thatthe Federal Government ought to develop a new build-ing code based on energy performance standards. Theybelieve that such standards are an important signal tothe construction industry and to consumers that conser-vation is an important priority with the Government. TheDivision of Building Research (DBR) is in fact developingguidelines for energy budgets in four types of buildings:office buildings, shopping centres and retail stores,apartment buildings, and schools. DBR hopes to publishthese guidelines in 1983 as a first step towards acomprehensive set of building energy performancestandards. As the standards develop, DBR is alsoassessing how compliance with the guidelines can beassured as this is seen as one of the main problemareas. All levels of government will have to work to-gether if progress is to be made.

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SOURCES, CURRENCIES AND TECHNOLOGIES

RECOMMENDATIONEnergy performance standards for buildingsshould be incorporated in the National BuildingCode so that conservation and innovativedesign and construction are promoted.

RECOMMENDATIONStandard tests for the energy performance ofbuildings should be established by the FederalGovernment so that energy-efficiency ratingscan be assigned.The Committee has concluded that performance

standards are preferable to prescriptive standards sincethey do not stifle innovation and thus allow architectsand builders freedom of choice in developing energy-efficient housing. Nonetheless, prescriptive examplesmust still be provided to assist the building trades inadapting to the new standards. The Commit tee recog-nizes that building performance is more difficult toassess, but feels that the extra effort is worthwhile. Wealso recognize that in developing a performance code,regional standards will be required to take account ofclimatic variations across Canada. The proposed de-velopment of such standards for the Canadian Arctic(Canada. EMR, 1980e) is an appropriate beginning tothis process.

Another interesting suggestion put before the Com-mittee recommended conducting a voluntary perform-ance test on new housing. A 24-hour airt ightness test,similar to a mandatory test done on all new homes inSweden, would provide a fuel economy rat ing whichconsumers could use as a basis for compar ing homes.That is to say, like the miles per gallon ratings on cars,such a system would not provide a guaranteed fuelconsumption figure but rather a means of comparison.Once homebuyers are made aware of the potentialenergy savings which can be realized in energy-efficienthousing, it is felt that they will begin to demand this sortof home in the marketplace. As a first step, the FederalGovernment should subject its own buildings and thosewhich it helps f inance to such tests. Private contractorsshould then be encouraged to assign an energyperformance rating to their buildings as well.

Airtightness does conserve energy but it may alsolead to the accumulat ion of unacceptable levels ofindoor pollutants and to exces:- humidity if proper pre-cautions are not taken. This problem can be overcomeby providing adequate and controlled venti lation in theotherwise airtight building. By passing incoming cold airand outgoing warm air through an air-to-air heatexchanger (Figure 6-1), proper ventilation can beachieved without losing excessive amounts of heat tothe outdoors. A number of air-to-air heat exchangers areon the market at prices ranging from $100 to $500, andplans are also available for inexpensive do-it-yourselfunits.

WARMEDFRESH AIRTO ROOM

PAIMAOEOF

TREATED PAPI

Figure 6 - 1 : A SIMPLE AIR-TO-AIR HEAT EX-CHANGER

INDOORS i OUTDOORSCOOLED

EXHAUST AIRTO OUTSIDE

WARMEXHAUST AIRFROM ROOM

COLDFRESH AIR

FROM OUTSIDE

As warm and cold air pass each other in separateand alternating layers of the heat exchanger, heatis transferred from the outgoing stale air to theincoming fresh air. This ensures air exchange butrecovers most of the heat which would normallyescape with the vented air.Source: After Hand, 1980, p. 77.

RECOMMENDATIONThe Committee recommends that the FederalGovernment establish a standard procedure fortesting the airtightness of buildings. The Com-mittee further recommends that, once estab-lished, the test be applied to Federal buildingsand to all new homes financed through theCanada Mortgage and Housing Corporation.

Further energy savings in buildings can be achievedby reducing lighting levels (provided that the lighting isnot already serving to handle part of the heating require-ment of the structure).

RECOMMENDATIONLighting regimes in business and homes shouldbe designed to ensure that electric energy isnot wasted.

In a greater departure from typical building design,one witness advocated underground construction as ameans of lowering the energy requirement for spaceheating and cooling. This saving can be realizedbecause temperature fluctuations within the soil or

121

bedrock are much smaller than in the air. For example,an estimafed 10% of all cold storage in the UnitedStates is underground in Kansas City. In Scandinaviamore than 200 underground units are now in operationfor storing petroleum products. Experience here hasshown that the construction and operating costs of suchfacilities are 30 to 50% less than for surface storageand that the energy required to keep the oil warmed to50 to 70°C (to avoid coagulation and other problemswith product quality) is reduced by 60 to 80% (Janssonef al. 1980). Cold storage and frozen storage facilitiessimilarly demonstrate impressive energy savings whenlocated underground.

The Swedes are also considering transporting hotwater up to 120 km from a nuclear power station toserve district heating systems in Stockholm and Upp-sala. The water would be moved through unlined rocktunnels because heat conduction in rocks is so low thatthe loss of thermal energy would be minimal.

While the groundwater regime and other subsurfaceconditions will prevent underground construction frombeing practiced in some locales, this approach shouldbe receiving more serious consideration in Canada.

RECOMMENDATIONUnderground construction should be encou-raged in appropriate circumstances as an ener-gy-conserving building technology.

As we noted at the beginning of this section, wehave done little more than give examples of some ener-gy-conserving suggestions made to the Committee.Nevertheless, the breadth of these suggestions has rein-forced our conclusion that the conservation resource isrich indeed and worthy of much more attention than ithas thus far received.

122

Figure 6-2: FUEL USES FOR BIOMASS

Direct

combustion

AiiUown

gasification

« M A S SPyrotyslsor

gasification . *>

Hydrolysis and ]fermentationto ethanol

Methanol

synthesis

JAnaerobic

\

Remove CO2

Source: United States. Office of Technology Assessment, 1980a, p. 24.

SteamElectricity ~;- -Space and water heatingCooking :

C Process heat (e.g. crop drying)

Space and water heatingElectricityCooking

L Stationary enginesRegional fuel gas pipeline

Mobile enginesStationary enginesGas turbines :Space and water heatingCookingProcess heat

I Steam

r ElectricitySpace and water heating

J Process heatI Steam

Stationary enginesl~ Mobile engines

Natural gas pipeline

There are a number of advantages which accruefrom exploiting biomass as a source of energy.

• It is an abundant resource.

• It is available in many different forms and can beadapted to a variety of uses.

• Biomass is continuously renewable provided adequateresource management practices are carried out.

• Its combustion can not only provide energy but it canalso help reduce the waste disposal and/or pollutionproblems associated with the forest, pulp and paper,and food processing industries, and with the municipaland agricultural sectors.

• The combustion of recently living organic matter doesnot significantly alter the concentration of carbondioxide in the atmosphere as does the combustion offossil fuels. (This presumes proper management of thebiomass resource.)

• Biomass is a widely dispersed resource which canoften be well matched to regional requirements andsmall decentralized sites for energy production.

• Biomass can replace high-sulphur-content fossil fuelsand, in so doing, can reduce sulphur dioxide emis-sions, one of the prime causes of acid rain.

There are, however, a number of difficultiesassociated with using biomass for energy production ona large scale.

• The harvesting of vast amounts of biomass couldradically modify natural ecosystems and irreversiblydamage them or, even worse, completely displacethem. (This impact could be reduced with properresource management; however, if very large amountsof energy were to be derived from biomass. theamount of growing space required would be corre-spondingly extensive.)

• There is a great deal of controversy over whetherlarge tracts of land should be used for food or energyproduction.

• The resource is often remote in location.

• It typically has a low energy density (contains a lowamount of energy per unit weight).

• It is often difficult to ship and store because of its widevariety of forms, which means that much of thisresource is not economically exploitable with prevail-ing energy costs.

• Biomass usually has a high moisture content, meaningit must be dried before burning because energy con-

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SOURCES, CURRENCIES AND TECHNOLOGIES

tent is inversely proportional to water content andcombustion efficiency increases with fuel dryness.

If biomass is burned in numerous, small, widely-dis-persed combustion units, it is" difficult to control orcontain emissions.,

Biomass has a relatively high ash content.

The incomplete combustion of biomass, such asoccurs in most wood stoves and,fireplaces, releasespolycyclic organic matter (including benzo [a] pyreneand several other known or suspected cancer-produc-ing agents) to the atmosphere.

1. ALCOHOL FUELS

There are two types of alcohol which have recentlyreceived attention as possible transportation fuels.These alcohols are methanol, characterized by thechemical formula CH3OH, and ethanol, CrH5OH.Although the former is usually associated with the feed-stock wood (methanol has long been referred to aswood alcohol), it can also be synthesized from otherbiomass feedstocks, as well as from natural gas andcoal. Ethanol can similarly be derived from wood but theprocess has not yet reached the commercial stage andnearly all ethanol is produced from the fermentation ofsugar- or starch-containing biomass.

Alcohols have long been considered attractive asliquid fuels. Henry Ford originally designed the Model Tto run on alcohol and later modified the design toaccommodate alcohol, gasohol or gasoline whenpetroleum-derived fuels became cheap and plentiful.Alcohols are well suited for use as fuels because theyare completely biodegradable, are easily portable, havea relatively high Btu content per unit weight (Table 6-1),burn cleaner than petroleum-derived fuels, and have ahigher octane rating than pure gasoline with no additives(octane number is a measure of a fuel's resistance toself-ignition). The combustion products of ethanol arediscussed in the section on Nonconventional Propulsion.

Table 6-1: ENERGY CONTENT OF METHANOL,ETHANOL AND GASOLINE

Methanol .EthanolGasoline

Btu/lb

. 8,570

. 11.50013,900

Source: After Mathers, 1980, p. XXII-11.

MJ/kg

202744

A. ETHANOL

Ethanol (C2H5OH) is produced almost exclusively byfermentation and all such processes consist of. fourbasic steps:_(1) the feedstock is processed and/ortreated to produce a sugar solution; (2) yeasts or^bac-teria convert the sugar to ethanol and carbon dioxide;(3) distillation is used to remove the ethanol from thefermentation solution, yielding ah ethanol/water solutionwhich is at best 95.6% ethanol at normal pressures; and(4) any remaining water is removed to produce "dry" oranhydrous ethanol. This latter i tep is usually accom-plished by a second distillation in the presence ofanother chemical.

Distillation

Distillation is a physical process which con-sists in this application of heating an ethanol-water solution and passing the resultant vapour

rough a cooling column in which the vapour. ^ndenses and revapourizes numerous times — aprocess that concentrates the ethanol andremoves the water.

Because the boiling points of ethanol andwater are very close, however, a certain amount ofwater is entrained with the ethanol as it vapourizesand condenses; thus the ethanol cannot be mademore pure than 95.6% by this process alone.

The main distinctions among fermentation pro-cesses utilizing different feedstocks arise primarily out ofdifferences in the pretreatment steps to which the feed-stock is subjected. Sugar-containing crops such as sug-arcane, sweet sorghum, sugar beets and sugar mangelsyield sugar directly upon processing, but the sugar mustbe concentrated or treated in some other fashion forstorage to prevent it from being broken down by bac-teria. Starch-containing feedstocks such as corn andother grains need to be broken down (hydrolyzed) withenzymes (biological catalysts) or acids to reduce orconvert the: starch to sugar. Similarly, cellulosic (woodyor cellulose-containing) feedstocks such as crop resi-dues, grasses, wood and municipal wastepaper requireextensive hydrolysis (either acidic or enzymatic) toreduce their more inert, long-chain, cellulose moleculesto sugar subunits. No commercial cellulose-to-ethanolinstallations exist at the present time but pilot plantshave been established in Brazil using eucalyptus wood.Small-scale experiments are being carried out in Canadaas well.

Ethünol can of course be produced from starch andsugar feedstocks with commercially available technolo-gy. Starch feedstocks are primarily grain crops such ascorn, wheat and oats, but also include various rootplants such as potatoes. The sugar feedstocks are

125

Figure 6-3: PROCESS DIAGRAM FOR THE PRODUC-TION OF FUEL ETHANOL FROM STARCH-CONTAINING CROPS

Press cake Oil

Source: United States, Office of Technology Assessment1980b, p. 160.

plants such as sugarcane, sweet sorghum, sugar beets,mangels and Jerusalem artichokes. The two processesfor producing ethanol from starch and sugar feedstocksare shown schematically in Figures 6-3 and 6-4.

The attractiveness of ethanol derives f rom the factthat it can be used directly as a portable l iquid transpor-tation fuel or it can be mixed with gasoline to producegasohol. In either case, it reduces demand for gasoline.

Mohawk Oil is the first company in Canada toproduce gasoline-ethanol fuels. This company will beusing ethanol, manufactured from damaged or surplusagricultural c rops at the rate of approximately two mil-lion gallons per year (roughly 155 barrels per day) in arevamped distillery, to produce gasohol for sale in retailoutlets in Manitoba.

The proposal to make ethanol f rom cellulose is veryappealing as it would allow exploitation of Canada'ssubstantial cellulosic biomass resource, including woodwastes, spruce-budworm and fire-damaged wood, forfeedstock. This resource is much larger than that repre-sented by our starch and sugar crops and our foodprocessing wastes combined, and its exploitation wouldavoid using food crops for energy product ion. Unfortu-nately, there are problems in breaking down cellulose tosugars which can be fermented to ethanol.

Figure 6-4: PROCESS DIAGRAM FOR THE PRODUC-TION OF FUEL ETHANOL FROM SUGAR-CONTAINING CROPS

Sugar crop

Residues(for fuel)

Separated

sugar solution

Ferment.

Concentrateto syrup

Dilute

} " ^ Storage

- Distill

to 95% ethanolEvaporate

Distill to

dry ethanol

IStorage

Source: United States, Office of Technology Assessment.1980b. p. 160.

WoodWood is composed primarily of cellulose,

hemicellulose and lignin. Cellulose can be brokendown to sugar and then fermented to alcohol.Hemicellulose, on the other hand, is composed of5-carbon sugar (pentose) subunits and is moredifficult to convert to ethanol. Researchers at theNRC have, however, made good progress in de-veloping organisms capable of pentose fermenta-tion. Lignin binds the woody material together,makes the cellulose difficult to hydrolyze and isitself not fermentable to alcohol.

A new process has been developed in Canadawhereby cellulosic material is steam exploded to openthe wood structure and make the cellulose accessiblefor hydrolysis. This technique, together with the develop-ment of new hydrolytic enzymes, new genetically-engi-neered fermenting organisms and new ways of separat-

126

SOURCES. CURRENCIES AND TECHNOLOGIES

ing and utilizing the lignin by-product of the process,promises to make the production of ethanol from cel-lulosic feedstocks much more attractive in the future. If

- biotechnological research produces new organismswhich can improve the efficiency of the overall process,ethanol from biomass may become a much more attrac-tive alternative energy option in the future.

CONCLUSIONCanada could become a world leader in cel-lulose-to-ethanol technology by encouragingthe research, development and demonstrationof novel processes already being developed inthis country.

RECOMMENDATIONThe Committee recommends that the Federal

- Government, through Canertech, encourage theresearch, development and commercializationof cellulose-to-ethanol technology.

The controversy over whether or not ethanol pro-duction from agricultural crops results in a net energygain remains to be resolved. If there is a net energy gain,it is certainly small. Similarly, the controversy overwhether agricultural crops should be used for food or forfuel rages on.' Many observers now agree, however, thattwo competing end uses for the same product willinevitably lead to increased food prices and perhaps, insome instances, to food shortages in the future.

CONCLUSIONThe Committee believes that fuel ethanolshould be produced from spoiled and/or sur-plus crops and from crops grown on marginalland. Only in special circumstances shouldprime agricultural land or crops be exploited.

CONCLUSIONThe Committee believes that exploitableethanol feedstock resources (not counting cel-lulose) cannot provide enough ethanol topower the whole transportation sector.

RECOMMENDATIONEthanol should be used as a gasoline extenderonly and not as a substitute transportation fuelin pure form, except perhaps on farms.

Individuals and members of farm co-operatives maywish to proceed with alcohol production using surplus or

damaged crops or biomass grown on marginal land. Todate, experience with the on-farm production of alcoholin the United States has shown that this can be anexpensive and frustrating venture. Nevertheless, somefarmers feel such production could be profitable andprovide a measure of energy self-sufficiency on the farm.There is no single recommended method for ethanoidistillation and each operation must consider the availa-bility of conventional fuels for the distillation process aswell as the kind of ethanol feedstock available. Forexample, the amount of ethanol which can be derivedfrom different crops varies widely (Table 6-2). Further-more, farmers must take into account the capital invest-ment required for stills and the use to which the alcoholand by-products of distillation will be put.

Table 6-2: POTENTIAL ALCOHOL YIELDFROM SELECTED STARCH- ANDSUGAR-CONTAINING CROPS

Crop

CornWinter wheatBarleyRyeSpring wheatMixed grains (West)BuckwheatPeas, beansMixed grains (East)OatsPotatoesJerusalem artichokesFodder beetsSugar beetsField roots

Yieldlal

(litres/tonne)

430410390390380350350350330270110

87-100«"70-77"»

7030

(a) Yield assumes a maximum theoretical conversion toalcohol of 95%. The efficiency on farms would morelikely be 50 to 85%.

"" Preliminary values.

Source: Canada, Department of Agriculture, 1980, p. 4;and personal communication. Department ofAgriculture, 1981.

The on-farm distillation of ethanol can give a meas-ure of independence from conventional fuels becausegasoline engines can burn gasohol containing between10 and 20% etfianol without modification and apparent-ly without causing damage. Kits are being developed toallow gasoline and diesel engines to burn mixtures of

127

gasoline (or diesel), alcohol and water, and engineswhich run on pure alcohol have been developedalthough they are not commercially available in Canada.

The economic risk of farm-scale alcohol productionis not well defined. Farmers may find this activity w;i .h-while if they are good handymen => ,n can build a stillrather than buy a commercial set-Lip, i hey may also notcount their own labour in overall costs. In any eventthere will be some capital outlay and interest to be paidon the capital. In addition, the farmer must consider theloss in revenue from not selling that portion of a cropwhich is used as ethanol feedstock, plus the costs ofdepreciation, operation, energy inputs, - chemicals,enzymes, insurance, licensing and bonding. (Feeding themash or residue from ethanol production to livestockcould help offset some of these expenses.)

CONCLUSIONEvidence suggests that on-farm alcohol produc-tion can be a risky business. Some knowledgeof chemistry, engineering, microbiology andplumbing is required and careful economicplanning must be carried out before any suchoperation is attempted.

One way in which Canada is attempting to make iteasier for interested and enterprising individuals orgroups to begin alcohol fuel production is to ease regu-lations set out in the Excise Act. Under existing legisla-tion, alcohol must be collected in a "locked receiver"which can only be opened by a customs and exciseinspector. The alcohol must also be rendered undrink-able (denatured) by adding a prescribed chemical if thealcohol produced is to be free of excise duty. Further-more, a distiller's license ($250 per year) is required aswell as a surety bond of $200,000 which costs $500 peryear. These restrictions inhibit would-be distillers frommaking alcohol fuel.

CONCLUSIONThe Committee welcomes the Governmentaction to amend the Excise Act, making iteasier for interested people to begin distillingalcohol fuel.

RECOMMENDATIONThe Committee recommends that the Govern-ment ensure, in its amendments to the ExciseAct, that production of ethanol in excess ofindividual requirements may be sold to retailsuppliers of alcohol fuel or gasohol.

RECOMMENDATIONThe Committee does not endorse pure ethanolfrom starch or sugar feedstocks as a majoralternative liquid transportation fuel for Canada.It does, however, recommend that fuel ethanolbe permitted for personal use or for the produc-tion of gasohol.

B. METHANOL

: Methanol (CH3OH) can be synthesized from a varie-ty of sources including biomass, natural gas and coal. Inthe cases of biomass and coal, the raw feedstock mustfirst be gasified before synthesis. -

In the production of methanol from wood biomass,three basic steps are involved: gasification of the. wood,cleanup and modification of the gas produced.iandliquefaction of the gas. Generally, gasification occurswhen the wood is heated in an atmosphere deficient inoxygen. This prevents complete combustion of thewood and produces a gas containing principally hydro-gen, carbon monoxide, carbon dioxide and hydrocar-bons. These gaseous compounds are not produced inconcentrations ideal for the synthesis of methanol;therefore, their relative proportions are altered to obtaina hydrogen to carbon ratio which will provide goodyields of methanol. In the final step, methanol is pro-duced by subjecting the modified synthesis gas to from50 to 150 atmospheres of pressure at 230 to 270°C inthe presence of a catalyst. A flow diagram for methanolsynthesis is given in Figure 6-5.

Initially, a methanol industry could be fueled byunusued mill wastes, forest residues, and other recover-able biomass not currently utilized. In the long-term,however, significant potential exists for tree farming(energy plantations) to provide the cellulose required tofeed methanol plants. These plantations would allowabandoned farms and marginal lands to provide highyields of forest biomass with rotation times of from twoto five years.

Since the quantities of cellulosic feedstocks are somuch greater than those of sugar or starch crops, itwould seem there is greater potential for alcohol produc-tion via the methanol route than via the ethanol route(although production of both alcohols can beencouraged). The provision of cellulosic feedstocks formethanol production requires less energy than doesraising agricultural starch or sugar crops. In other words,the chances of achieving net energy gains frommethanol may be greater than from ethanol. Fewerland-use arguments should arise in producing feedstockfor a methanol industry than for an ethanol industry astrees can be grown on land which ranges widely inquality and topography. Indeed, there is unlikely to be

128

SOURCES. CURRENCIES AND TECHNOLOGIES

Figure 6-5: PROCESS DIAGRAM FOR METHANOLSYNTHESIS

Wood or

plant herbage

Recycle tars

and oils

Shift gas composition

Pressurize withcatalyst

Distill

StorageCrude

methanol

Storage

MethanolSource: United States. Office of Technology Assessment,

1980a, p. 95.

severe competition between crops for energy and cropsfor food if methanol is produced, thus resolving the"food versus fuel" controversy to some extent.

Witnesses before the Committee described aunique Canadian opportunity for development of amethanol industry, incorporating a combined naturalgas/biomass primary feedstock. Since the carbon/hydrogen ratio in biomass is higher than ideal formethanol synthesis, significant gains in yield can bemade by spiking the synthesis gas with hydrogen.Canada has abundant supplies of natural gas which is ahydrogen carrier, as CH4 has a high hydrogen to carbonratio. Therefore combining natural gas with the biomasssynthesis gas is essentially spiking it with hydrogen andhigh yields of methanol can thereby be achieved. Highyields translate into reduced production costs and meanthat the methanol industry can produce methanol at

costs competitive with gasoline at present world pricesfor oil.

This technology would allow Canada to use naturalgas in the short term to produce some liquid transporta-tion fuel. It would also allow us to exploit biomass formethanol production faster and on a larger scale thanby any other route. Methanol could be produced via thishybrid technology within two years, whereas developinga pure biomass-to-methanol technology would requirean estimated seven years before commercial productioncould begin. Not only would yields be high using thishybrid approach, but experimentation with biomassgasification (the last untried step in methanol-from-biomass technology) would allow Canada to develop anexpertise which could later be applied in methanolplants based completely on biomass as a carbon sourceand using pure hydrogen to spike the synthesis gas. Thiswould give Canada a lead in the research, developmentand commercialization of-methanol production^ frombiomass and, when perfected, the expertise and tech-nology could be profitably exported.

CONCLUSIONThe Committee concludes there is a greatpotential for developing a methanol-from-biomass industry in Canada and that this coun-try could become a world leader in methanoltechnology.

RECOMMENDATION

The Committee recommends that the construc-tion of a hybrid natural gas/biomass methanolplant be encouraged to demonstrate this tech-nology of methanol production as soon aspossible.

RECOMMENDATION

Since hybrid natural gas/biomass methanolplants are a transitional step in establishing afuel methanol industry, the Committee furtherrecommends that such plants be convertedwhen feasible to operation using biomass aloneor biomass spiked with electrolytic hydrogen.

ft has been suggested to the Committee that one ofthe major stumbling blocks to the introduction ofmethanol as an alternative fuel is the fact that Canadianconsumers presently have to pay world-level prices forthis commodity as a petrochemical feedstock.

129

RECOMMENDATIONIn the short term, Canada should allow fuelmethanol to be sold at prices lower than gaso-line in order to make it attractive as an alterna-tive transportation fuel.

2. BIOGAS

Biogas is produced by the anaerobic digestion ofbiomass. In this process various types of bacteriadegrade organic material in the absence of air to pro-duce a gaseous mixture composed predominantly ofmethane (CH4 or natural gas) and carbon dioxide invarying proportions. The organisms which cause thebreakdown may already be present in the feedstock ormay be added to it as an inoculum (a small volume of abacterial culture).

The energy value of biogas derives almost com-pletely from its methane content which may range from50 to 70% of the evolved gas. The carbon dioxide canbe removed if the biogas is to be mixed with natural gasin pipelines but this involves treating the gas with acomplex and expensive technology. Other gases suchas ammonia may also be produced in varying propor-tions during the digestion process, but the main con-taminant is usually hydrogen sulphide (H2S). This com-pound can cause corrosion in engines using biogas fueland it may cause irritation and nausea in peopleexposed to it. H2S can be removed with simple, inexpen-sive technology.

Digestion usually takes place at temperatures rang-ing from 35 to 65°C. depending upon the feedstockused and upon which kinds of bacteria one wishes tofavour for growth. The digestion process is well suitedfor treating wastes which are found in, or can be con-verted to, a wet slurry. Thus, in addition to producing avaluable energy commodity, anaerobic digestion canreduce the toxicity of waste materials, and hence theirpollution hazards, and can reduce the odour problemsusually associated with animal wastes.

Digestion is carried out by a mixed assortment ofbacteria not all of which have been identified. Thebreakdown processes are complicated and the bio-chemistry of degradation is not completely understood;however, degradation generally takes place in threesteps. First, decomposition of (arge organic moleculesyields smaller molecules such as sugars and aminoacids. Second, these smaller compounds are convertedto organic acids, and third, the organic acids are trans-formed into the gas methane.

Cellulosic materials digest slowly, particularly thosewith a high lignin (complex cementing substance foundin wood) content because this material makes the cel-

lulose less susceptible to attack. Treatments such ashydrolysis can improve the susceptibility to attack butefficiencies of conversion to biogas are not expected toexceed 40 to 50 %. It may therefore make better senseto burn cellulosic feedstocks directly to release energyrather than try to gasify them.

The best feedstock for biogas production is wetbiomass such as animal manures, some aquatic plants,sewage sludges, or food-processing wastes fromcheesemaking or potato, tomato or fruit processing. Thedigestion process must be monitored frequentlybecause changes in temperature, feedstocks or toxinconcentrations can generate an increase in the quantityof certain acids which can in turn inhibit the methane-producing bacteria.

During digestion a bacterial population evolveswhich is particularly adapted to the operating conditionsof the reactor. For this reason, feedstock compositionand operating conditions should be kept as constant aspossible to ensure the process operates with maximumefficiency and produces optimal yields. Biogas produc-tion usually begins within a day of charging the digesterbut, without proper management, stabilization of thefermenting population may take months.

In addition to producing gas, anaerobic biodiges-tion generates other materials which are useful — theeffluent from a digester may contain bacteria, lignocel-lulosic (containing lignin and cellulose) material, undi-gested feedstock and nutrients. Since most pathogenic(disease-causing) bacteria are destroyed during the pro-cess, wastes can be rendered less hazardous and theeffluent or sludge used as a soil fertilizer or, under somecircumstances, as a water fertilizer to enhance aquaticplant growth. Dewatered digester wastes also hold thepromise of providing animal feed, a possibility underactive investigation. Certainly, the economics of biogasproduction from animal manure and other feedstockswould be improved if digester wastes could be used forfeed.

Despite the reduction in pathogenicity, the majorpotential problem associated with biogas productionconcerns treatment of waste waters which may containheavy metals, pesticides and high levels of nutrients.This, however, is only a design and operational problemas the technology exists for treating such waters torender them environmentally harmless.

There are many designs for anaerobic digesters andthese reactors are found in many forms and sizes aroundthe world. They range from primitive structures to tech-nologically-advanced units and R&D in this technology isadvancing so rapidly that any list of digesters quicklybecomes outdated. However several basic reactor typesare described in the following paragraphs.

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SOURCES. CURRENCIES AND TECHNOLOGIES

The single-tank plug flow system is a simple adap-tation of the digester type which has long been used inAsia (Figure 6-6). The feedstock is loaded through theinlet, digested material is removed from the outlet andbiogas is taken from the (op of the fermentation tankwhere it collects.

Multitank batch systems consist of a series of tankswhich are sealed after being charged with feedstock.When the digestion process is complete the biogas isdrawn off and the effluent is emptied. Such systems arewell adapted to operations which produce feedstock inbatches rather than steadily.

A single-tank complete mix system consists of afermentation tank which is heated and mixed severaltimes daily. This system may be coupled with a secondunmixed, unheated storage tank to-form a two-stagedigester in which additional degradation takes place andsolid wastes are allowed to precipitate.rThe second tankallows yields of biogas to be improved. This type ofreactor is used primarily for sewage treatment.

Experiments are now being carried out with multi-phase digester systems in which successive tanks areregulated to optimize the various steps in the fermenta-tion process. These are complex systems which must becarefully managed and are presently being studied utiliz-ing sewage sludge as the primary feedstock. They maybe adaptable to other feedstocks as well and theoreti-cally could achieve high overall efficiencies in biogasgeneration.

Another variation in reactor design utilizes differenttypes of "beds" to act as a material support for thebacterial populations which bring about the digestion of

the raw organic matter. In this design the feedstockslurry is fed upwards through a vertical column packedwith small stones, plastic balls, ceramic chips or otherinert materials. The bacteria attach to this column ma-terial and degrade the organic matter as it flows past _.them. The design allows large quantities of slurry to pass~through the digester while maintaining a high concentra-tion of bacteria on the support material. This system isbest suited to dilute municipal sewage as thicker feed-stocks rapidly clog the column.

CONCLUSIONA wide variety of digesters has been describedin the literature and a number are available frommanufacturers. This type of system can helpfarmers attain'energy self-sufficiency on theirfarms, and for operators of large feedlots andstockyards it offers the added bonus of reduc-ing pollution problems by treating hazardouswastes. There are other advantages to begained from anaerobic digestion, including theproduction of fertilizer and, possibly, animalfeed.

RECOMMENDATIONThe Committee recommends that the technolo-gy of anaerobic digestion should be activelypursued in Canada and that additional biogasreactors should be installed to demonstratetheir effectiveness in the Canadian environ-ment.

Figure 6-6: CHINESE DESIGN OF A BIOGAS DIGESTER

Gas ventpipe Outlet Cover plate

Loadingchamber

Over-flow

Gas outlet pipe

Base

Groundlevel

Sludgechamber

Source: United States, Office of Technology Assessment, 1980b, p. 185.

131

3. WOOD

Wood has been used as a fuel in this country sinceit was first inhabited. In fact, the burning of fuel wood isprobably as old as civilization and continues to a greateror lesser extent throughout the world today. Wood iscertainly Canada's most abundant biomass resource. Itis available in most parts of the country either as wastematerial produced by the forest products industry or asstanding, living biomass. In the future, with proper man-agement of Canada's existing forests (which has nottraditionally been the case) and with the development ofenergy plantations on marginal or abandoned farmland,this country's biomass resource could significantlyincrease in size.

At the present time biomass supplies about 3.5%of Canada's energy requirements (somewhat more thanthat contributed by nuclear fission), most of which isderived from pur-forests. Its main use is for the produc-tion of process heat and steam and, to a lesser extent,electricity. Virtually all of it is utilized by the forestindustries.

The $104 million Forest Industry Renewable Energy(FIRE) program was designed to replace fossil fuels usedin the forest industry by unutilized combustible biomassresidues. Its goal is to save the equivalent of 23 millionbarrels of oil per year by 1985. FIRE provides financialincentives to the forest industry for the installation ofproven biomass energy equipment and the companiesinvolved receive progress payments of up to 20 % of theeligible costs of approved projects. The program wasinitiated in 1978 and to date some 45 applications forassistance have been approved at a total commitmentof $21 million. The type and distribution of fuelsreplaced through the FIRE program are shown in Table6-3.

Most FIRE funds have gone to pulp and paper millsrather than to the wood industry as the former generallyhave a higher energy consumption per unit of productoutput than the latter. Energy consumption for pulp andpaper manufacture amounts to about 20 % of the valueadded compared to less than 5% for wood products.Pulp mills require larger, more expensive and morecomplex energy systems, and it is easier to promote theprogram among 150 pulp mills than among the approxi-mately 8,000 wood operations.

The Federal Government has also provided $30million for the period 1978 to 1984 through the Energyfrom the Forest (ENFOR) program to help fund researchprojects and demonstrations of innovative techniques inbiomass resource production and conversion. ENFOR isadministered by the Canadian Forest Service of Environ-ment Canada and evaluates proposals for biomass plan-tations, wood combustion and gasification, and liquid

Table 6-3: CONVENTIONALPER ANNUM BY

FUELS REPLACED"FIRE" PROJECTS

APPROVED TO 22 JUNE 1980

Type of Fuel Replaced

OilNatural GasCoalElectricityPropane and Butane

(al So far the equivalent of 2.5

Per Cent ofTotal

70.023.43.82.70.1

100.0la>

million barrels of oilper annum has been replaced.

Source: Canada. Department ofResources, 1980f. p. 12.

Energy. Mines and

fuels production from biomass, to name some of themost important. As of early 1980, the Government hadfunded some 46 projects worth around $3.7 million.

CONCLUSIONThe Committee concludes that the ENFOR andFIRE programs have been largely successfuland applauds the recent announcement in theNational Energy Program of a near tripling ofthe budget for FIRE.

Some say the amount of energy derived frombiomass (primarily wood) could be trebled by the year2000, an optimistic view which is shared by the Commit-tee. The main problems to be overcome are thoseinherent in the resource itself: the size of the capitalinvestment required to allow exploitation of theresource, and the lack of a well-developed commercialand industrial infrastructure geared to the harvesting,distribution and utilization of biomass in its many forms.

Many of the disadvantages involved in exploiting allforms of biomass, such as its low energy density, itsvariety in form and the attendant difficulties in its trans-portation, can be mitigated to a large extent by upgrad-ing. This can be achieved by such means as pulveriza-tion, drying and densification, or chemical conversion. Infact, a variety and combination of steps can transformthe organic matter of biomass into standard commodityfuels which are both convenient and economic to ship,store and burn.

There are many ways wood can be used to provideenergy (Figure 6-7). It can be burned directly to provide

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SOURCES, CURRENCIES AND TECHNOLOGIES

heat, process steam and, via co-generation, electricityas well. It can be gasified to provide a fuel gas to replaceoil and natural gas. It can be converted to methanol viasynthesis after gasification, or to ethanol via fermenta-tion. Finally, by means of slow heating under pressure, itcan be converted to oil..

A. TDIRECT COMBUSTION OF-WOOD-AND-DENSI-FIED BIOMASS FUEL (DBF)

Wood can be burned directly for residential use orfor industrial purposes but certain conditions have to bemet to maintain a positive net energy balance in exploit-ing this resource. The energy contained in wood justifiesits cutting, handling and transportation for up to 40 to60 miles depending on the region; however, furtherprocessing or transportation means that more energymay be sgent in delivering the fuel to the user than isprovided during combustion. It does not make goodenergy sense to "spend "more energy in providing a fuelthan-is'contained "in-"the "fuel itself (although such usemay be justified in the short term if the wood substitutesfor oil). The use of unprocessed wood should remainlocal then and, fortunately, the wide dispersion of thewood resource very often allows this condition to bemet.

Wood tissue is comprised primarily of cellulose,hemicellulose, lignin and water in varying concentra-tions. Biomass typically has a low mass energy density(MED) or low amount of energy which can be deliveredper unit of mass. Similarly, biomass has a low volumeenergy density (VED). This is unfortunate as fuels with a~high MED (or VED) are preferable to those with a lowMED (or VED) because the former type is more efficientto store, ship and burn. Thus the large resources ofwood in areas far from population centres or resourceutilization locations are not economically exploitableunless they are upgraded or converted to fuels whichhave a high MED (or VED) before shipping. Theprimeenergy commodities which can be derived from woodand wood waste are densified wood and, as describedelsewhere, the alcohols methanol and ethanol. Anincrease in MED and VED is most desirable becausecombustion efficiency increases with increasing energydensity and low moisture content; the efficiency of boilerheat exchange is a function of the quantity of gasproduced frorrfsTgiven volume or mass of wood and thewater content of the fuel.

Mass energy density and volume energy densityvalues for raw wood and densified wood are shown in

Figure 6-7: CONVERSION PROCESSES FOR WOOD

WUUU

•WURKlDn

j

• N' ^

N,

COflibtlSfiOfli£>Space heating

rj>Hot water

Combustion

inbofler| > Steam GGo£>Electricity

Mroknm

yssificstion

Combustion

inbofcr

> Steam

>Hot water

.Heat

Pyiolyilsor

oxygen-Mum

synthesisr>Wethanol

>Pyrolysis oil> Regional gas pipeline

Hydrolysis EHunol synthestarO Ethanol

Source: United States, Office of Technology Assessment. 1980a, p. 64.

133

Table 6-4. These data show that the densification ofwood converts this resource into a substance which issuperior to the raw feedstock in terms of fuel value perunit of volume. Figure 6-8 shows the typical energycontent of biomass versus moisture content.

Table 6-4: ENERGY DENSITIES OF"WOOD BY"MASS AND VOLUME

WaterCon- Densitytent (gams/

Fuel (%) cm3)

Heat of Combustion'31

Volume (VED)Mass (MED) (kilojoules/

(kilojoules/gram) cm3)

Wood

DensifiedWood

10

10

0.6

1.0

18.6

18.6

11.2

18.6

" I Values shown are representative of a range for each fuel.

Source: After Reed and Bryant. 1978. p. B-2.

Figure 6-8: SENSITIVITY OF ENERGY CONTENT TOMOISTURE CONTENT IN WOOD

-18.6 Kilojoules/gram (16 MBtu/Ton)

at 1 0 % moisture

40 60% Moisture in Biomass

Source: After Reed and Bryant. 1978, p. B-5.

The first patent for densification was issued in 1880and described a process in which sawdust or otherwood residues were heated to 150° F and compacted tothe "density of bituminous coal" with a steam hammer.Since then a number of patents have been issued forsimilar processes but, in general, five forms of biomassdensification are now practiced commercially: pelleting,cubing, extrusion, briquetting and rolling-compressing.

Depending on the feedstock and the degree ofcompaction, densifred biomass may have a water-repel-lent skin. However, exposure to water should be avoidedduring storage, particularly if the DBF has a high paper

content. Because compacted fuels have a low moisturecontent, they biodegrade slowly and can be stored forlong periods but only if kept dry. Biomass pellets make asatisfactory fuel for fixed-grate boilers, either supple-menting or replacing coal.

While DBF does not share two advantages ofcoal — concentrated sources of supply and an estab-lished industrial infrastructure — neither does it share-many of its liabilities, such as sulphur emissions, environ-mental disruption by strip-mining and black lung diseasein coal workers. Although any economic analysis of DBFversus coal is highly site- and time-sensitive, it appearsthat DBF may have an economic advantage in regionswith abundant biomass but no coal. DBF may also bepreferable to coal for industrial or utility processes wheresulphur abatement is required.

• The technology for burning DBF in supplement to orin replacement of coal is well developed. Suspensionand spreader stoker coal-firing systems,can:burn,DBFwith little or no modification. «Boilers-specificallydesigned to burn wood — fluidizëd bed combustors.small firetube boilers, bark burning boilers, and vortexcombustors — will also burn DBF and are commerciallyavailable today in a wide range of capacities.

It is neither practical nor economical to substituteDBF in existing gas and oil boilers. DBF is, however, anattractive feedstock for low- to medium-Btu gasification.The product gas can be used to produce process heatand to fuel existing gas and oil installations with onlyminor engineering modifications. Because gasifiers per-form best on a uniform, dense and clean feedstock. DBFmay be preferable to coal or green biomass.

Other potential uses of DBF include fueling residen-tial, commercial or industrial central heating systems;fueling airtight wood stoves; firing external combustionengines; fueling fireplaces and outdoor grills; and pro-ducing pyrolysis oil and high-density charcoal. In sum-mary, the process of densifying biomass holds the pro-mise of providing a dry, uniform, easily stored andconveniently shipped fuel from the wide variety of resi-dues produced by forest, agriculture and food process-ing industries.

CONCLUSIONThe Committee feels that there are definiteadvantages to be gained from increased exploi-tation of Canada's wood resources and thatone of the ways of making wood a more attrac-tive and versatile fuel is by densification.

RECOMMENDATIONAs the technology for biomass densification isavailable now and is being used in some loca-

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SOURCES, CURRENCIES AND TECHNOLOGIES

tions, the Committee recommends that de-velopment of the wood densification industryshould be encouraged in Canada. This meansthat increased emphasis in R&O should beplaced on improving combustion technologiesfor densified biomass fuels and on developingend uses and markets for the densified biomassproduct.

Some environmentalists are expressing concernabout the growing popularity of residential, as opposedto industrial, wood burning. Carbon monoxide, particu-late matter and polycyclic organic matter (POM) are allemitted from wood stoves and fireplaces, and a draftpaper prepared by Battelle for the Environmental Pro-tection Agency in the United States concerning industri-al and commercial wood combustion, stated that

...low-temperature wood-burning units tend to pro-duce more undesirable atmospheric emissions than dothe larger units which operate at higher temperaturesand with greater turbulence... it may be that the smallresidential wood-burning units are capable of produc-ing larger quantities of POM emissions than the com-mercial/industrial-size wood-burning boilers... (Bu-diansky, 1980, p. 770)

Thus there is a danger that increased residential useof firewood may have detrimental effects on the environ-ment. The POM emitted by wood stoves and fireplacescontains benzo [a] pyrene and other known or suspect-ed carcinogens and may represent a significant healthhazard and cancer risk in certain locations.

Wood is now recognized as a serious source of airpollution. Vail. Colorado, and many communities inNew Hampshire and Vermont (particularly in valleyssusceptible to paniculate haze) have already beenforced into coming to grips with the smoke and hazeresulting from the residential wood-stove boom.(Budiansky. 1980. p. 769)

CONCLUSIONThe Committee sees increased use of firewoodfor home heating as a means of substituting arenewable energy source for oil and as a goodway of making people aware of how they useenergy in their lives. This may help Canadiansdevelop a personal feeling for the importanceof conservation. Nonetheless, the Committee isconcerned about the increased use of firewoodin homes, particularly in urban areas.

RECOMMENDATIONThe Committee recommends that a study ofhow the increasing combustion of wood inurban areas will affect air quality should begin

immediately. Such a study should be completedbefore expanded use of firewood is recom-mended for urban centres.

RECOMMENDATIONFire safety regulations should be reviewed andstrengthened so that the installation and use ofwood stoves and fireplaces does not lead to atragic increase in the incidence of fires inhomes using fuel wood.

B. GASIFICATION

When wood is exposed to heat it first begins to losemoisture then decomposes (pyrolyzes) into a variety ofcompounds depending upon temperature, the rate ofheating and the presence or absence of oxygen. Thewood itself does not burn, rather it is the products ofpyrolysis which do. In the presence of ample supplies ofoxygen, these products combust completely to formpredominantly carbon dioxide (CO2), water and ash. Inthe absence of oxygen, the main gaseous pyrolysisproducts are carbon monoxide (CO), hydrogen (H2) andsome CO2, collectively known as synthesis gas.

Gasification of wood under pyrolytic conditions is ahighly useful process because it converts a bulky anddifficult to handle raw material into a flexible fuel. Thesynthesis gas produced can be piped easily; it can beused to fire fossil-fueled systems; or it can be combust-ed to generate electricity. In addition, the chemicalcomposition of this gas can be adjusted by addinghydrogen to give the proper ratio of carbon to hydrogento allow efficient synthesis of methanol.

RECOMMENDATIONThe Committee believes that the technology ofbiomass gasification should be funded on apriority basis in biomass R&D. It has the poten-tial of allowing greater use of wood (and otherbiomass feedstocks) to fire systems which tra-ditionally have used fossil fuels. It is perhapsthe last part of the technology of methanolsynthesis from biomass which must beimproved upon to assure commercialization ofthis alcohol fuel option.

4. PEAT

A. THE NATURE OF PEAT

Peat is partially decomposed organic matter whichis made up principally of decayed Sphagnum moss,

135

although a minor component may be contributed byother aquatic plants, grasses or sedges. It is formed veryslowly by the decay of this dead vegetation underanaerobic (oxygen deficient) conditions. All Canada'speat bogs have developed since the last glacial epoch,some 10,000 years ago.

Peat bogs differ from other types of wetlands in thatthey are nourished almost entirely from rainwater. Theirsurface is a continuous carpet of Sphagnum moss whichsupports a layer of grass and shrubs and, occasionally,trees. In Canada peat bogs may be as large as tens ofkilometres across but are generally much smaller.

A peat bog is made up of a number of layers. Thetop level is living bog vegetation. The second consists ofvery young peat „which is characterized by a'loose openstructure that clearly shows the form of the dead vegeta-tion from which it is derived. The third layer is of varying

Development of a Peat Bog for EnergyProduction

Peatlands have to be developed before theycan produce utilizable peat and a great deal ofpreparation, usually taking several years, isrequired before production can proceed. First, thebog must be surveyed to determine how muchpeat there is, what its quality is, how it can best bedrained and how access routes to the resourcecan be set up by rail and road.

The second step is drainage. Since peat isapproximately 95% water, it cannot supportheavy machinery and removal of as much mois-ture as possible is essential. A network of drain-age ditches is dug to begin the process of dewa-tering and, as the bog consolidates, these drainsare deepened to facilitate further water removal.This stage normally takes five to seven years tocomplete and reduces the bog's moisture contentto approximately 90%. This may seem a trivialimprovement but, in fact, it is very significant as itrepresents removing more than half the watercontained in the peat. At 95 % water content theratio is 1 part solid to 19 parts water; at 90% theratio is 1 part solid to only 9 parts water.

After draining the bog is levelled. This is doneto facilitate drying of the peat and to allowmechanical handling to take place with maximumefficiency.

The final step involves establishing a networkof light railways over the surface of the bog for thehandling and transportation of the peat. All thesesteps plus the fact that only a few inches of peatare harvested annually mean that a bog may becommercially exploited for several decades.

thickness but becomes darker and denser with depthuntil the black colour and putty-like consistency ofmature peat is encountered.

At all its different stages in development, peat con-tains a very high proportion of water, usually averagingaround 95% by weight. This means that, perhaps sur-prisingly, there is less solid matter in peat than there is inmilk. This high water content has always been the mainbarrier to the extensive exploitation of pea! as an energysource.

Because peat occurs on the Earth's surface andextends only to relatively shallow depths, its removal isunlikely to cause environmental problems as severe asthose associated with strip-mining. However, great careshould be exercised during and after peat excavation toensüre Jthat harvested bogs do not turn into muddywastelands. Fortunately, peatjias been: mined for yearsin other countries and there is a"wealtrfbf experience inreclaiming bogs. In fact, with proper management, dep-leted bogs can be used for agricultural land or forenergy plantations (Figure 6-9). It is essential then thatpeat harvesting only be permitted with the assurance ofproper reclamation after excavation.

Harvested peat can be marketed in three differentforms. Sod peat is made by a large cutting machinewhich dredges peat from all depths of the bog, mixes itand forms it into sods. They are therefore all of similarquality and can compete in the marketplace with otherindustrial fuels. Milled peat is scraped from the surfaceof the bog in the form of a coarse powder. After dryingthis material can be either burned in power stations orprocessed into briquettes. Briquettes are small tightly-packed blocks of milled peat, the quality of which iscarefully monitored because the briquetting process cantolerate only small variations in density, moisture andash content. About one-fifth of the energy in the peat isused to produce the briquettes and this product is usedprimarily for home heating.

B. INTERNATIONAL AND CANADIAN DEVELOP-MENT

World peat resources over 50 cm thick are estimat-ed to total some 145 billion tonnes dry weight, having anenergy equivalent to about 63.5 billion tonnes of oil.Much of this total is located in the U.S.S.R. but largequantities are found in other countries as well, withCanada ranking second in terms of resource size (Table6-5).

Finland has a number of power stations which utilizepeat to produce electricity, and steam and hot water fordistrict heating. The Finns expect to derive from 5 to10% of their total energy requirements from peat in thefuture.

136

SOURCES, CURRENCIES AND TECHNOLOGIES

Figure 6-9: BOGS OF TODAY ARE FARMLANDS AND ENERGY PLANTATIONS OF THE FUTURE

PEAT-FIRED ELECTRICALGENERATING STATION

Table 6-5: WORLD PEAT RESOURCES

Country

U.S.S.R.™Canada""FinlandUnited StatesSwedenPolandWest GermanyIreland

Billions ofTonnes at

40% MoistureContent

147.422.716.312.78.25.45.44.5

••' Investigated resources; probable resources are about200 billion tonnes.

vi Now regarded as underestimated.

Source: "Peat Facts", 1977.

In the U.S.S.R. it is estimated that an electricalgenerating capacity in excess of 6,000 MW is peat-fired.(By comparison, Churchill Falls generates 5.225 MW

and supplies about 6% of Canada's electrical power.) Inaddition, perhaps 4.5 million tonnes of peat are pro-duced annually for home heating.

Ireland presently operates seven peat-fired electri-cal generating stations. These installations consumeapproximately 56 % of Ireland's harvested peat (about 5million tonnes annually) and produce about one-third ofthe country's thermally-generated electricity. If peatwere not used as an energy source, the cost of supply-ing that electricity with imported oil would be some £60million. Moreover, exports of peat (predominantly hor-ticultural peat) currently pump £70 million a year into theIrish economy.

Irish research is currently directed towards studyingthe conversion of depleted bogs into energy plantationsand experiments with fast-growing hybrid clones ofseveral tree species are being actively pursued. Themost promising species so far examined are willows,poplars and alders. It is estimated that the energyoutput per unit area from a biomass plantation will onlybe some 1/7th or 1/8th of that derived from milled peatproduction.

Peatlands cover approximately 12% of Canada'sland surface, an area 12 times that of the Island of

137

Newfoundland. Much of the resource is located in inac-cessible northern areas but significant deposits occur inthe Atlantic Provinces and in southern Quebec andOntario. Attempts to inventory the peat resource havebeen made in a number of parts of Canada, particularlyin New Brunswick and Newfoundland, but a full charac-terization of the Canadian resource has yet to be done.The use of peat for energy production is attractive,particularly in areas that are" deficient in other energyresources, but at the present time Canadian peat isrecovered exclusively for horticultural purposes.

Recently there has been increasing interest shownin fuel peat by Canadians and one study on the feasibil-ity of peat-fired power generation concluded that peatwas economic compared with oil-fired Oi coal-fired sta-•'ons of the same size in New Brunswick. Hydro-Quebechas studied the feasibility-of peat-fired-power stationsand has been considering peat gasification as a meansof replacing diesel generation on Anticosti Island. New-foundland is developing a peat bog to assess the feasi-bility and cost of harvesting and transporting fuel peaton the Island. Peat burning tests will be conducted atthe Grand Falls pulp and paper mill of Price (Newfound-land) Limited. The Province is also interested in thepotential for displacing diesel-electric generation withsmall peat-fired generating units in isolated communi-ties.

Perhaps one reason peat development has beenslow in Canada derives from the fact that very little peatexpertise exists in this country. This is in contrast tomany European nations where much peat R&D and theteaching of peat-related studies at the university leveltakes place. The technology of harvesting and utilizingpeat is well developed elsewhere although it is strange toCanada.

CONCLUSIONAs peat deposits often occur in less developedregions of Canada and since peat production isa labour-intensive activity, development of

~ Canada's peat resources could provide employ-ment as well as produce energy.

RECOMMENDATIONCanada's extensive peat deposits represent asignificant alternative energy opportunity, butour resource base has been only partiallyoutlined. An accurate assessment of its quanti-ty, quality and location should be completed.

One option for peat use which may be particularlyattractive from the point of view of helping Canadadevelop methanol as a portable liquid power fuel wouldbe to develop an expertise in methanol production frompeat-derived synthesis gas.

RECOMMENDATIONThe Committee recommends that peat R&Dencompass the development of an efficienttechnology for the gasification of peat. Thiswould allow Canada to broaden its resourcebase for the production of the alternative liquidtransportation fuel methanol.

138

ES-"~;.*~'f.'r^~ '•' * j-;;.-.—.-jr~^-;..---O- .-_, . -.

state, the bed shows many of the characteristics of aliquid, hence the term fluidized. Fuel is added to andburned within, the fluidized bed, and a significant fractionof the combustion heat is extracted by heat transfersurfaces in direct contact with the bed. : ^

Hot gases from combustion may be used to drivegas turbines for electrical power generation. The com-bustion chamber itself may be kept at atmosphericpressure (Atmospheric Fluidized Bed — AFB) or pressu-rized (Pressurized Fluidized Bed — PFB). The latteroption is technically more complex but it reduces thesize of the combustion chamber and hence capitalcosts. Tests have suggested that PFB units allow greatersulphur removal than AFB systems. Finally, the use of agas turbine in a combined gas-steam system is moreefficient with a PFB.

FBC offers a number of distinct advantages overconventional boiler technology.

• Sulphur dioxide (SO2) emissions can be reduced atlower cost than with any available alternative byadding limestone to the bed.

• Nitrogen oxides (NOJ emissions are reduced becauseof the lower combustion temperatures characteristicof FBC units.

• Coal and other fuels burn more rapidly in a fluidizedbed and heat transfer to the boiler tubes is more rapidand uniform than in conventional boilers.

• The positioning and closely-spaced arrangement ofthe boiler tubes makes fluidized bed units morecompact.

• FBC boilers can burn almost any size or type of coaland a wide variety of other fuels such as wcod chips,combustible garbage, municipal sludge, agriculturalwastes, oil shale and petroleum fractions as well.

• Capital costs are competitive with conventional solidfuel boilers.

The principles of FBC technology are well estab-lished, and its advantages and problems are fairly wellunderstood. Pressurized fluidized bed boilers for electri-cal power generation are in the advanced pilot plantstage, and there seems to be no doubt that they willprove to be technically feasible. In North America, FBCis used today in commercially available atmosphericpressure boilers, dryers and incinerators.

In Britain, interest in FBC was sporadic until 1974when, following a major study of the national coal indus-try, the government authorized the National Coal Boardto implement a "Plan for Coal" that will increase annualoutput to 136 million tonnes with the aim of displacingoil and gas in the national energy mix. Renewed impetuswas thus given to the development of FBC and by 1980several demonstration/prototype boilers using FBCwere in daily use at industrial sites.

In the United States research into FBC is at anadvanced stage and the Johnston Boiler Co. of Ferrys-ville, Michigan is already licensed to sell boilers incor-porating this technology. A recently commissioned 12.6kilogram/second (100,000 Ib/hr) FBC steam generatorat Georgetown University, Washington,- D.C.y wasdesigned and manufactured by Foster Wheeler EnergyCorporation. This unit has been burning high sulphurcoal in a densely populated area since mid-1979 andhas met strict pollution emissions regulations.

The United States Department of Energy is spon-soring research into both atmospheric and pressurizedfluidized bed boilers. Unde' this program, a 20 MW AFBpilot plant has been operated by Monangahela PowerCo. at Rivesville, West Virginia since 1976. The project isaimed at developing an environmentally acceptable pro-cess for burning high-sulphur coals. Five other contractshave been let by DOE to design, buildand test FBCboilers or heaters using AFB combustors. In PFBresearch, the Department is sponsoring the Curtiss-Wright Corp. in designing, constructing, operating andevaluating a 13 MW coal-fired pilot plant. In Fiscal Year(FY) 1980 Federal funding of FBC research amounted toover $50 million and in FY 1981 funding is to exceed$68 million.

In West Germany, a full-scale demonstration of FBCtechnology is underway at the Flingern power station atDusseldorf. The 35 MW installation was designed, builtand commissioned by companies of the Deutsche Bab-cock Group. Planning began in early 1978 and trialoperations began in late 1979.

As part of the activities of the International EnergyAgency, the United Kingdom, United States and WestGermany are cooperating in the construction of a PFBcombustor in Grimethorpe, Yorkshire, England. Thefacility was started in fiscal year 1977 and was to becompleted in FY 1980.

The People's Republic of China is perhaps the mostadvanced country in terms of the practical application ofFBC. Research began in the early 1960s and the firstFBC boiler was put into service in Mourning in 1969. In1980 there were more than 2,000 FBC boilers operatingin China, with capacities ranging up to 50 tonnes/hour.They are used for district heating, industrial applicationsand power generation, and burn a wide variety of fuelsincluding such low-grade energy sources as shale fines,coal washery wastes, stone-like coal and lignite.

Simple fluidized bed combustors have been avail-able commercially in Canada for close to 15 years. TheDepartment of Energy, Mines and Resources (throughCANMET, the Canadian Centre for Mineral and EnergyTechnology) supports a demonstration program intend-ed to promote FBC technology at an increasing scale incommercial applications specifically suited to exploit its

140

SOURCES, CURRENCIES AND TECHNOLOGIES

advantages; and to reduce risk to a level at whichprivate sector funding can be rationalized.

Special objectives of the EMR demonstration pro-gram are to: provide the industrial market with an alter-native to oil and natural gas; provide a means of burninghigh sulphur coal with control of SO2 emissions; providea technology for utilizing low-grade fuels which have acombination of high moisture, high ash, and low reactivi-ty; and provide more efficient coal-to-electricity cycles(Friedrich, 1980a,: p. 8). The main elements of thisprogram are summarized in Table 6-6.

As indicated in Table 6-6, two fluidized bed boilersare being installed at a Canadian Forces Base heatingplant at Summerside, P/ince Edward island. These boil-ers will use 5 % sulphur coal from Cape Breton Island.Construction will begin in 1981 with thejirst unit to becommissioned in 1982. In industrial applications an FBCboiler an order of magnitude larger than the one plannedfor Summerside would be needed. The Department ofEnergy, Mines and Resources has offered financial andtechnical support for the construction of such a boiler bya team of designers, manufacturers and users at a

suitable industrial location. For electrical power genera-tion, an FBC boiler perhaps ten times the size of anindustrial boiler would be needed. The obvious place forsuch a utility-sized boiler would be in the Atlantic region;with its local supply of high-sulphur coal and its depend-ence upon foreign oil. Under the Oil Substitution Agree-ment between the Governments of Canada and NovaScotia, the Department of Energy, Mines and Resourceshas sponsored studies into the best location for a 150MW unit, with completion targeted for 1988.

Western Canadian coal must be washed and driedbefore it is exported. In the past the drying process hasused natural gas heating. However, Alberta Governmentregulations now require new coaï dryers to be coal-fired.With FBC, this could be accomplished using the coalrejects from washing, not high quality coal. This meansthat some 6.4 million tonnes (7 million tons) of washingrejects produced in Alberta and British Columbia everyyear, which presently represent a waste disposal prob-lem, could be utilized to fire a FBC drying unit. EMR hasa contract with coal suppliers in Alberta to siudy thedesign and economic feasibility of a FBC drying facilityusing these coal rejects.

Table 6-6: CANADIAN DEMONSTRATION

Project

1. HEATING PLANT(CFB Summerside)Coal & Wood

2. INDUSTRIAL STEAM PLANTCoal & Possibly Wood

3. THERMAL POWER PLANT(Nova Scotia PowerCommission) Coal

4 COAL DRYER(Luscar Ltd.)Coal Washery Rejects

5. PFBC COMBINED-CYCLEThermal Power Plant(B.C. Hydro) Coal

6. R&D PROGRAMSIn-house and Contract

Source: Lee et a/. 1980, p. 63.

PROJECTS IN FBC

Status

Design1st Unit2nd Unit

Site Proposal

Site StudyDesignDemo

StudyDemo

DesignDemo

Continuing

CompletionDate

198119821985

1981 (Est)

19811984 (Est)1988 (Est)

19811983

19831988 (Est)

UnitSize

20 TonnesSteam/Hour

100 TonnesSteam /Hour

150 MW(e)

70 MW(e)

Pilot and bench-scaleexperiments andmechanistic studiesof combustion, emis-sions and metallurgy

141

Manpower and funding for the above activities arebeing allocated through CANMET. For FY 1980-81, 7.75person-years have been allotted and funding for R & Dand Demonstration projects amounts to $218,000 in"direct expenditures and $1,255,000 in contracts. Underthe National Energy Program, Federal Government ex-~penditures on new coal technologies are projected toamount to "$50 million over the period 1980-83, withthe provision of a further $100 million in 1984-85"(Kelly, 1981, p. 76). The bulk of the funding is assignedto the demonstration of FBC in thermal-electric powergeneration in Nova Scotia.

CONCLUSION- Fluidized bed combustion technology offers the

best approach to minimizing emissions of sul-phur and nitrogen oxides from coal-fired boilersand for allowing the efficient combustion of awide variety of low-grade fuels.

RECOMMENDATIONThe Federal Government should undertake athorough analysis of the opportunities and ben-efits of fluidized bed combustion in the Canadi-an context, and of the funding levels necessaryto exploit the technology to maximum advan-tage. Topics which should be addressed in theanalysis include the choice between variousFBC technologies from economic and environ-mental standpoints, the use of fuels other thancoal, and the nature of regional opportunities.

B. COAL-OIL MIXTURES (COMS)

The rapidly escalating cost of petroleum hassparked renewed interest by governments and utilities inburning slurries of coal in oil (coal-oil mixtures or COMs)in oil-fired thermal-electric generating stations. This canbe accomplished with only minor modifications to powerstations, whereas conversion to coal firing only requiresextensive alterations. A recent study by Montreal Engi-neering Company on behalf of the Canadian ElectricalAssociation showed that 5.25 million barrels of oil peryear (14,400 barrels per day) could be saved by con-verting 11 oil-fired utility boilers in the Maritime Prov-inces to 50% COM (Montreal Engineering Company,1979). The use of coal-oil mixtures is also worth consid-ering in other applications in which oil alone is common-ly used as boiler fuel, including industrial and commer-cial plants, district heating complexes, and ocean-goingships.

The Department of Energy, Mines and Resources,through the CANMET Energy Research Program, active-ly supports COM research in Canada. The COM pro-

gram has been in formal existence since 1977 when ademonstration program was begun at Chatham, NewBrunswick with the New Brunswick Electric Power Com-mission. A project is also underway to demonstrate theuse of coal-oil mixtures in blast furnaces. CANMET'sresearch and development is carried out in cooperationwith a number of other agencies, including the CanadianElectrical Association, the International Energy Agency,Nova Scotia Technical College, the Ontario ResearchFoundation and the Saskatchewan Research Council.The total value of contracts issued by CANMET underthe program to the end of fiscal year 1980-1981amounts to approximately $1,099,000, and planned ex-penditures under contract for FY 1981-82 are $400,000.

A novel advance in COM technology has beenmade by Scotia Liquicoal Ltd. of Halifax, Nova Scotia.The company is producing COM at bench scale using asphericaragglörneration pröcéssdeveloped by the NRCand under license to Scotia Liquicoal. Water forms up to20% of the mixture and stabilization is achieved byultrasonic agitation. The product is more stable, lessviscous and more easily burned than conventionalCOMs. The company has committed over $1.1 million tobring this process to the point of commercial exploita-tion by late 1981.

Spherical Agglomeration in COMs

Spherical agglomeration is a means of sepa-rating ground coal from water and solid impurities.Water and oil are added to the input coal andvigorously mixed; oil coats the coal particles,which then adhere to one another forming sphe-rules which can be separated from the impuritiesand most of the water by screening.

The benefits of pursuing COK technology in theAtlantic Region today are obvious. Such a strategy is ofless interest in Central and Western Canada wheregenerating alternatives allow oil-fired stations to seelimited duty.

RECOMMENDATIONCanadian RD&D in coal-oil mixture technologyshould be accelerated where feasible. A heavyemphasis should be placed on the rapid deploy-ment of this technology in the MaritimeProvinces.

2. CONVERSION TECHNOLOGIES

Coal contains more highly complex organic mole-cules and has a higher carbon/hydrogen ratio thanpetroleum. In coal conversion, therefore, the goals are

142

SOURCES, CURRENCIES AND TECHNOLOGIES

two-fold — to break down the complex molecular struc-ture and to lower the carbon/hydrogen ratio. The formerobjective is accomplished by the application of extreme

"heat; the latter is achieved "ie r by removing carbonfrom the coal or by adding h/un •< T I to it. Coal conver-sion can produce either gaseous or liquid fuels. .-

Coal gasification is an established technology whichhas been applied at various time; in •-'any countries.Progress has been made recently in developing tech-niques for economically gasifying coal in situ for deliveryto surface pipelines. Since Canada's coal resources areconcentrated in Western Canada where extensivereserves of natural gas are also found, it will not makeeconomic sense to pursue coal gasification in thiscountry.

Figure 6-10: TYPICAL LIQUID YIELDS ANDTHERMAL EFFICIENCIES IN COALLIQUEFACTION PROCESSES

LIQUID YIELD

HYDROLIQUEFACTION

PYROLYSIS

SYNTHESIS0.1 0.2 0.3,0.4 0.5 0.6 0.7

i i im3/t| i i i

1.0 2.0bbl/ton

3.0 4.0

CONCLUSIONFor at least the remainder of this century, Cana-da's resources of natural gas obviate the needto pursue coal gasification as an energyalternative.

The large-scale derivation of liquid fuels from coal inCanada is another matter, however, and one worthy ofserious consideration as a medium-term energy strate-gy. Coal liquefaction by synthesis after gasification hasbeen proven technically feasible, most recently at theSASOL I and SASOL II Complexes in South Africa.Various other hydroliquefaction processes are at thepilot plant stage of development. In general, the techni-cal feasibility of coal liquefaction is well established.There are three main processes by which coal liquefac-tion can be achieved — hydroliquefaction, pyrolysis andsynthesis — but no single technological route for theprocess has emerged as being clearly superior.

Hydroliquefaction takes place in a slurry under con-ditions of high temperature and pressure and in thepresence of a catalyst. Hydrogen is added directly to themixture or "donated" by a hydrogen-rich solvent toyield a liquid product which can then be distilled toproduce a variety of fuels. The choice of catalyst deter-mines to some extent the liquid produced; high gasolineyields, for example, are possible using zinc chloride.Whatever the catalyst, the process has a major draw-back, however, as impurities and the large, heavy mole-cules in the coal itself quickly contaminate the catalysts,which are both difficult to regenerate and expensive toreplace. As shown in Figure 6-10, the process yieldsbetween 0.35 and 0.65 cubic metres of liquids per tonneof coal (2-4 barrels/ton) with thermal efficiencies in therange of 60-75%. It is apparent that if the technologicalproblems in hydroliquefaction can be solved, the pro-cess is the best of those available in terms of both liquidyield and thermal efficiency.

HYDROLIQUEFACTION

PYROLYSIS

SYNTHESIS

THERMAL EFFICIENCY

20 40 60 80 100

Note: Thermal efficiency is the percentage of energystored in the coal input which is recovered inthe liquid products.

Source: Taylor, 1979. p. 14.

In the pyrolysis process, liquefaction is achieved byconcentrating carbon in the input coal residue ratherthan by adding hydrogen. This is accomplished throughdestructive distillation; that is, the coal is heated in theabsence of air until chemical breakdown occurs. Acarbon-rich coke or char is left behind and hydrogen-rich tars, oils and gases are released which are suitablefor upgrading to fuels. The process is used now in theproduction of metallurgical coke and the resultant tarsand oils used as petrochemical feedstocks. Not all cokeis suitable for metallurgical use, however, and the resi-due from pyrolysis (at least half the feed coal) has nopresent industrial application. The liquid yield is lowestof the three coal liquefaction processes, between 0.1and 0.28 nrVtonne (0.5-1.7 barrels/ton), but the ther-mal efficiency is intermediate between hydroliquefactionand synthesis at about 50-60% (Figure 6-10).

In synthesis technology the coal is first gasified andthe produced gases are then synthesized into liquids.

143

The process was pioneered in Germany before WorldWar II and is that used at the only commercial coalconversion plant in the world, the SASOL (South AfricanCoal, Oil and Gas Co.) complex in South Africa. Coal isreacted at high temperature and pressure with steamand oxygen to yield a mixture of gases, principallycarbon monoxide (CO) and hydrogen (H2). In order toproduce liquids, the chemical bonds which were brokento produce the gas must now be partially reassembled,making the process inherently inefficient. Synthesis doeshave the advantage, though, that it can use a widevariety of coals and produces high quality liquids, includ-ing methanol if desired. This coal conversion route yieldsbetween 0.18 and 0.36 cubic metres of liquid per tonne(1-2 barrels/ton) but has the lowest thermal efficiency(35 to 45 %) of the three options.

Liquid fuels are usable in a much greater range ofapplications than solid fuels and herein lies the reasonfor considering coal liquefaction. As an approach to oilsubstitution, coal liquefaction might be considered par-ticularly attractive in Canada because of the large coalresource base. Nevertheless, when one considers thisapproach in terms of its economics, which conversionroute to pursue and the product range, the question ofwhether and how to proceed with a major projectbecomes extremely complex.

Liquid fuels from Canadian coals are not now com-petitive with those derived from crude oil or oil sands.This situation is not likely to change for the simplereasons that bitumen available from oil sands is closerchemically to the desired end product than is coal, andthe extraction process is cheaper than coal mining onthe same scale. Furthermore, Canada has an enormousoil sands resource, sufficient to supply domestic needsfor liquid hydrocarbons for several hundred years evenat current rates of consumption.

Coal liquids contain more impurities than conven-tional oils but often contain less sulphur, so that refiningthem and burning the products might be environmentallyless hazardous than is the case with conventional fuels.Such a statement cannot be made with confidence,however, because an assessment of environmentalimpact would require knowledge of the liquefaction pro-cess to be used, and the physical and chemical natureof the coal feed for the process.

The large-scale mining of coal to supply a liquefac-tion plant could have a profound environmental impacton the area to be mined, especially if strip-mining weredone. By 1975, a total of about 16.000 hectares(40,000 acres) of land in Canada were disturbed bystrip-mining for coal, of which only about 20% wasslated for reclamation. In 1979, Canada produced anestimated 33 million tonnes of coal, or an average ofapproximately 90,400 tonnes/day. A coal liquefaction

plant of optimum size — considered to be one produc-ing about 16,000 ma/d, or 100,000 barrels/day, ofliquid products — would consume roughly 30,000tonnes/day of coal. This would require a major boost inCanadian production and a consequent increase in therate at which land would be strip-mined. Strip-mining forcoal results in better worker health and safety, a higherpercentage of coal recovery and lower production coststhan is the case with underground operations. Neverthe-less, problems of land reclamation and acid mine drain-age would have to be faced if the decision were made toproceed with coal liquefaction on a large scale.

South Africa is the only country in the world operat-ing commercial coal liquefaction plants. The SASOL Icomplex delivered its first coal liquids in 1951 andpresently produces about 8% of the country's gasolineat a cost of around $2 per gallon. A second plant,SASOL II, was opened in 1980, and SASOL III isplanned to begin production in 1983. The three plantstogether will consume 28.8 million tonnes of coal annu-ally and will meet at least half of South Africa'spetroleum needs. The project is reported to be marginal-ly profitable in the South African context, partly becauseof the low cost of labour in that country, but it seemsdoubtful whether a similar operation could be profitablein Canada without much higher petroleum prices.

In the United States intensive research into coalliquefaction is being carried out under the auspices ofthe Department of Energy, with the objective of estab-lishing a synthetic liquid fuels industry. Environmentalstudies into the impact of coal conversion processes areproceeding as well, and results indicate that all pro-cesses include the necessary technology to meet exist-ing emissions standards. All of the conversion routesappear to be commercially feasible and the choice ofwhich process to go with will depend largely upon theproducts desired. Department of Energy funding for coalliquefaction projects amounted to $218 million in FY1979 and will rise to over $500 million in 1981. Nonethe-less, the U.S. program has encountered considerabledifficulties in trying to develop more efficient, "secondgeneration" coal conversion technologies. Project costsare much higher than originally anticipated and progresshas been slower than expected.

Plans for commercial coal liquefaction plants inWest Germany should be finalized by late 1981 accord-in j to the Federal Ministry for Science and Technology.The intention, however, is to establish a world techno-logical lead in the field rather than to make extensive useof liquefaction in Germany, because of the high expenseof extracting large tonnages of German coal. The con-struction of 14 coal-refining pilot plants at a cost of over$2 billion is under study but it is anticipated that, in1990. oil and gas derived from coal will satisfy only 3%of the country's needs.

144

SOURCES, CURRENCIES AND TECHNOLOGIES

Coal Liquefaction Research in the UnitedStates

The objectives of the U.S. program are to: (1)demonstrate the technical capability to commer-cially produce clean liquid and solid fuels fromcoal by at least four direct liquefaction processes(SRC-I. SRC-II, H-Coal, EDS) by the late 1980s;(2) develop improved indirect liquefaction pro-cesses to produce liquid fuels from synthesis gasmade from coal by the late 1980s; and (3) pro-mote the development of more advanced third-generation coal liquefaction processes which canbe demonstrated to be commercially viable in the1990-2000 time frame (U.S. Department ofEnergy, 1980a. p. 74).

The four processes referred to under item 1above are ihydrolTquefaction techniques. SolventRefined Cöar(SRC) "processes I and II are beingtested in 6 tonnes/day and 50 tonnes/day (coal)pilot plants that are now in operation. Technicaldemonstration plants of 6,000 tonnes/day size(one for each process) are in design stages.H-Coal is undergoing current development in a600 tonnes/day pilot plant which began operationin FY 1980. Exxon Donor Solvent (EDS) is under-going development in a 250 tonnes/day pilotplant which also began operation during FY 1980.As a contribution to research in the derivation ofcoal liquids by synthesis, design and constructionof a small (100 barrels/day) methanol-to-gasolinepilot plant based on a Mobil process isunderway.

In Great Britain, the National Coal Board (NCB)recently recommended the construction of two coalliquefaction pilot plants with capacities of 24 tonnes perday of coal. The $100 million cost of this project will beshared among the NCB, British Petroleum and theDepartment of Energy. Its goal is to accomplish nearly100% conversion of coal into high quality transportfuels, plus some liquid petroleum gas and syntheticnatural gas.

Canada's commitment to coal liquefaction researchhas been limited in manpower and funding comparedwith American, West German and British efforts.

The federal government, through CANMET, initiatedan ongoing coal conversion contracting-out programin 1976 to study various ways to process coals intoother energy forms. The liquefaction studies haveincluded assessment of the applicability of variousprocesses in Western Canada, bench-scale studieswith Nova Scotia coals and Saskatchewan lignites,investigation of electrode coke production for the

aluminum industry by the solvent refined coal process,and other more fundamental studies at various univer-sities and research establishments. The work hasserved to expand Canada's technical knowledge baseand to build Canadian expertise. Experimental facili-ties are also under construction for bench-scaleresearch at CANMET. (Taylor, 1979. p. 30)

Total in-house expenditures on coal liquefaction tothe end of FY, 1980-81 under the program are estimatedat $1,065,000 and expenditures of $230,000 are pro-jected for 1981-82. Total funds contracted out to indus-try, public research institutes, consultants and universi-ties from 1976 tothe end of FY 1980-81 are estimatedat $1,418,000 and projected expenditures for 1981-82amount to roughly $600,000.

The Government of British Columbia is establishingan Office of Coal Research to stimulate Provincial R& Din coal liquefaction. In the meantime, B.C. Researchleads the Province's technical development of coalliquefaction under monitoring by B.C Hydro. In June1980, the Energy Development Af jncy entered intonegotiations to issue a contract for a pre-feasibilitystudy on producing liquid fuels from the Hat Creek coaldeposit and subsequently awarded the study to FluorCorporation, the company responsible for the Sasolcomplex in South Africa. This work followed interestshown in coal liquefaction by Japanese and WestGerman firms. A consortium comprising BC ResourcesInvestment Corporation, Petro-Canada and WestcoastTransmission is also investigating constructing a coalliquefaction plant in the Province. The Federal Govern-ment has encouraged potential investors by indicatingthat it will permit the export of some of the endproducts.

In 1979 the Alberta Research Council, together withthe Alberta Department of Energy and NaturalResources, established a task force which recommend-ed a long-range plan for provincial research into coaland oil sands. Coal research will include studies inliquefaction, underground gasification and fluidized bedtechnology. Part of the work will be contracted out tothe private sector.

CONCLUSIONCoal liquefaction is incompatible with the Com-mittee's long-term objective of eliminatinghydrocarbon fuels from the Canadian energymix. Furthermore, Canada's requirements forsynthetic liquid fuels in the 1980s and 1990swill be more economically met, with less envi-ronmental damage, using resources in the oilsands of Western Canada and alternativeenergy sources.

145

RECOMMENDATIONCoal liquefaction should not be adopted as a environmental safeguards — to earn foreignlong-term energy option for Canada. In the exchange, to generate skilled employment andshorter term, however, a limited number of coal technological expertise, and to provide a sup-liquefaction projects aimed primarily at export plementary source of synthetic fuel for domes-markets could be accepted — with stringent tic use in an emergency.

146

ihirh giiows residen-

*'"" basic elements in a~,.,.-r hot water or stearr^

ivorinn ho^t to the consume^,,M„ ,,^..i a conventional

.,., , .eat may be delivered directly fromor rcr-loimcH .̂c o ^. .nrnr jy j t gf ^eCtriCal

,I.UM, nun inw IOI15I ww.nbined Heat and

) type oi scheme being termed co-genera-

lerent lines (Table 6-7).

North American choioe of providing steam heat fromcentral plants using fossil fuels is the less expensivedistrict heating option for supplying heat alone in smallsystems. For larger-scale applications the Europeanapproach'of using hot water from co-generating systems

'iSThe preferred option.

District heating will often be cheaper than individualunit heating because of lower overall capital costs andgreater combustion efficiency (even further efficienciescan be achieved with co-generation). Other factorswhich contribute to the attractiveness of district heating

• The cost of producing heat decreases as the size of adistrict heating plant increases, offering important

.-economies of scale.

» Low-grade coals or combustible municipal wastes canbe used to fire the boilers (most efficiently in fluidized

Table 6-7: COMPARISON OF NORTH AMERICANHEATING

North American

Single-purpose system employing a central heatingplant usually fired with gas or oil to provide heat only

He^. transfer medium is generally high-pressuresteam or high-temperature water

Serves institutional customers "primarily, at premiumcost -

Handles about 1 to 2 % of space heating requirementin North America

Source: After Farkas, 1975. p. 2.

AND EUROPEAN APPROACHES TO DISTRICT

European

Dual-purpose system employing a CHP (co-generat-ing) plant usually fired with coal to provide heat andelectricity ' , - ~ - ~- ~

Heat transfer medium is generally lower-temperature- water . - - -

Serves institutional and residential customers at com-petitive costs • •'-

Handles from 10 to 40% of space heating require-ment in Europe

bed combustors), thus reducing dependence upon oilfor heating.

• Air pollution can be reduced through efficient burnerdesign and maintenance, and the installation of anti-pollution devices. For example, sulphur dioxide emis-sions can be largely eliminated in fluidized bed com-bustors using limestone for sulphur absorption.

• Fuel handling and ash disposal are simplified by com-parison with dispersed heating units.

• Space in district heated buildings is not required forfurnaces, fuel tanks and so on.

• Fuel costs may be reduced by bulk purchase anddelivery.

• Heat can be derived from energy-efficient co-generat-ing plants.

• Condensation in dwellings is minimized because com-bustion is carried out elsewhere.

• Domestic fire hazards are reduced because no fuel isstored or burned where the heat is used.

Whether district heating is competitive with unitheating, however, can only be determined by takingpolitical, economic and social constraints into consider-ation:

• In planning and administering district heatingschemes, the involvement of several levels of govern-ment could prove to be an impediment to efficientdevelopment.

• The cost of restructuring an area to install districtheating is, in general, prohibitively high. District heat-ing is widespread in Europe as a result of postwarreconstruction, but in the North American context,large-scale application of this option may be restrictedto new construction.

• Aboveground district heating networks may be unat-tractive and prone to vandalism.

District heating is an established technology inEurope, Scandinavia and the Soviet Union. Thesenations were able to start district heating systems duringthe reconstruction after World War II and add to them asdemand grew.

In 1978, according to rough estimates, 600 compa-nies distributed more than 10 [million tonnes of oilequivalent] of heat through about 1,000 district heat-ing networks, comprising a total length of almost9,000 km of mains. Somewhat more than one-half ofthis heat was used in the Federal Republic of Ger-many: a little less than a third went to Denmark; theremainder is divided between France (10%), theNetherlands (3%), Belgium (2%), Italy and the UnitedKingdom (0.2-0.3%).

Total capacity, connected to district heating schemesin the [European Economic] Community, is presentlyof the order of 50,000 MW. The capacity per millioninhabitants is. with some 2,000 MW, in Denmark, thehighest of the Western World. In the Federal Republicof Germany connection density reaches about one-fifth of the Danish value. In the remaining Communitycountries densities are below 100 MW/million inhabi-tants. (Davis and Colling, 1979, p. 57)

District heating has gained in importance in Scan-dinavia since Sweden commissioned the first plantsduring the 1950s. In 1978, Sweden had 53 built-upareas served by district heating systems, 12 of whichincorporated power generation plants (co-generation).The total installed district heating capacity (1978) wasabout 10,000 thermal megawatts or about 1.25 kW percapita for the entire population. The Stockholm districtheating system is particularly noteworthy, being one ofthe largest co-generating systems developed in the free

148

SOURCES, CURRENCIES AND TECHNOLOGIES

Operation of District Heating Systems

In practically all district heating schemes,heat is transferred using hot water, althoughsteam has been the medium of choice in NorthAmerica. Water is inexpensive, non-toxic and hasa high specific heat, meaning it can store largeamounts of thermal energy compared with manyother liquids. Water boils at 100°C at A atmos-phere pressure (1 bar), but the boiling tempera-ture rises when the water is pressurized. In modernEuropean-style district heating applications, watertemperatures and pressures rarely exceed 180°Cand 10 bars, and temperatures of 130°C aretypical. Because water expands with heating, thepressurizing system must be able to accommo-date the increased volume. This capacity is nor-mally provided by an expansion tank.

I These pressurized systems must also provideadequate safeguards against either excess pres-sures or sudden depressurizations. Excess pres-sure can be handled by safety valves but asudden pressure drop is a more serious concern.Pressure loss due to accidental ruptures must belocalized by emergency shutoff valves. It is alsodesirable to exclude oxygen from the system toreduce corrosion, and soft water should be usedto minimize the formation of scale deposits inboiler and distribution pipes.

Heat in the circulating water is transferred toresidential or commercial users by heat exchang-ers such as conventional radiators. Water return-ing to the boiler has been cooled by some40-60°C during circulation.

While a flat rate may be charged by a utilityto a residential or industrial consumer, this offerslittle incentive to conserve; consequently mostconsumers are metered for their heat use. Euro-pean research has led to the conclusion thatmetered customers experience average econo-mies of 15-25% compared with flat-rate custom-ers. A district heating meter performs much thesame function as an electricity meter but it meas-ures and records both the temperature andvolume of v/ater used. This dual function makesmetering more expensive and more prone to error.

world. It comprises three subsystems with heat sourcesranging from temporary and permanent conventionalboilers to refuse incinerators.

Nearly 20% of Finland's buildings are serviced bydistrict heating in 20 large communities. In 1977 thedistrict heat demand of the Helsinki Metropolitan Areawas 1,920 thermal megawatts, with thermal power

plants producing 810 MW by co-generation and regionalhot water boilers supplying the remainder. In Denmark,district heating is even considered an economicallyviable option for_ small communities and individualf a r m h o u s e s . ' •••-•-- • - . . - _ . - • - . . - : - . :

In France, district heating accounts for 3% of thecombined institutional, commercial and residential heat-ing requirement. In contrast to other European coun-tries, French systems generally use superheated waterfor heat transfer (althoughtheuse of. steam is wide-spread in Paris). The West Germans are considering anational district heating grid, anticipating that by theturn of the century technology will permit the transfer ofheat over long distances for use up to six hours aftergeneration. Today, Italy boasts the longest district heat-ing line, at 106 km. In Austria. Vienna and Salzburg areserviced by district heating in co-generating systems,and in Prague, Czechoslovakia, district heating is a civicutility with over-1,000 km of mains installed.

The U.S.S.R. is the world's largest user of districtheating, with 50% of the installations and 85% of thetotal capacity. The Soviets claim that co-generationsaves them some 36 million tonnes of coal per year —more than Canada's annual production.

In the United States, district heating systems usingsteam satisfied about 1 % of the demand for heat in the1970s. About half this amount was sold by utilities, andthe rest was produced at government facilities, collegecampuses and so forth. Parts of downtown New York,Philadelphia, Boston, Detroit and other cities are sup-plied with steam heat from boilers and from condensingsteam turbines.

District heating is not practiced on a large scale inCanada and, with the exception of a pilot hot-watersystem in Charlottetown, all plants distribute steam.Perhaps the oldest system is the one established inWinnipeg in 1924 where a standby coal-fired electricalplant was used to generate by-product heat. Thissystem was expanded in the 1950s and again in the1960s, and is now operated by the municipally-ownedutility Winnipeg Hydro. In 1964, natural gas becameavailable in Winnipeg and the plant lost its competitiveedge in supplying heat. In 1978, the plant serviced 232customers in the downtown area.

In the early 1970s, the City of Toronto began tointegrate the steam heating systems of the University ofToronto, the Government of Ontario, the local HospitalSteam Corporation and its own Pearl Street plant. Theproject was inspired by the need to reduce air pollutionby the Pearl Street plant, the idea being to phase outthis old facility and finance a new one with revenuesgenerated from an expanded downtown market. Theintegration is proceeding and planning is underway toinclude a municipal refuse incinerator for heat genera-tion.

149

Smaller district heating plants operate in downtownMontreal (Canadian National Railways), Ajax, London,Ottawa (Parliament Hill), Vancouver, Charlottetown, Yel-lowknife and Inuvik. The Inuvik scheme is of particularinterest because steam is piped aboveground in utilidorstotalling 8 km in length.

Canadian research into district heating was spon-sored by the Office of Energy Conservation, EMR, whichfunded a number of consultants' studies in 1976 and1977. Other studies to assess the feasibility of expand--ing district heating facilities or installing new ones havebeen undertaken in Vancouver, Regina, Sarnia, Mon-„treal, Halifax, Edmonton, Toronto, London, Charlotte-town and Summerside.

In January 1981 the Governments of Canada,Ontario and the City of Ottawa agreed to undertake ademonstration project for the district heating of 197homes to be built in LeBreton Flats. The heating plantwill operate initially on natural gas but other fuels maybe substituted at a later time. Heat will be distributed by

hot water rather than steam and, while the cost of theheat will be shared equally by tenants, each home willhave its own flow and temperature meters. The City ofOttawa will own and operate the district heating utility,and startup is scheduled for late 1981.

CONCLUSIONDistrict heating will have limited application inCanada as the costs of installing such systemsin built-up areas are prohibitively high. Thistechnology may, however, make economicsense in regions of new construction.

RECOMMENDATIONThe Committee recommends that district heat-ing should be considered as an energy-con-serving technology for new subdivisions, com-munities and industrial parks.

150

electricity at a site (either in isolation or with backupfrom a utility) and which also handles all or part of theheating and cooling loads of the site. While new inname, such installations were actually common early inthis century in industrialized countries.

Systems which make sequential use of the energyinput to perform a series of tasks are often described ascascading systems. Such systems put energy toprogressively (ess demanding uses as it degrades inquality. For example, the Committee heard a proposal tolink a generating station, a heavy water plant and green-houses in a cascading, energy-using configuration, eachstep utilizing heat at progressively lower temperatures.Energy cascading is the central element in proposals tocreate energy centres around large thermal-electricgenerating stations, capitalizing upon the powerplant'srejected thermal.- energy.-Regardless of the nameapplied, however, the goal is:to convert as much of theenergy of a fuel into useful work as is possible in a givensituation.

B. CO-GENERATIONA co-generating system produces electricity and

heat (and sometimes mechanical energy) in tandem,with reclaimed heat from one part of the system beingused as an energy source for the other. Such systemshave their greatest potential in an industrial settingwhere a significant requirement for electricity is coupledwith a large and continuous demand for process steam.

Co-generation can be approached in two ways,through topping and bottoming configurations. In a top-ping cycle, electricity is generated at the front end of thesystem and the exhausted heat is either delivered direct-ly as thermal energy to another process (such as adistrict heating scheme or an industrial process) orrecovered for some other form of useful work. In abottoming cycle, thermal energy is produced for processuse and then recovered for electrical generation at theback end of the system: The choice between toppingand bottoming cycles in co-generation depends uponthe relative need for electricity and thermal energy in theco-generating scheme.

Fuel Saving by Co-generation

A simple example of co-generation illustratesthe value of the approach. Consider an industrialdevelopment requiring 20 units of electric powerand 100 units of process steam energy. At mostlocations today a utility supplies the electricity andan on-site process boiler makes the steam.Assuming an efficiency of 30% in the systemdelivering the electricity and an efficiency of 85%for the boiler system, 185 units of fuel are required

UTILITY GENERATION & PROCESS BOILER

to run the facility (67 units of fuel at 30% efficien-cy equals 20 units of electricity; 118 units of fuelat 85% efficiency equals 100 units of processsteam). A properly matched, steam turbineco-generating system might handle these sameenergy needs with an overall efficiency of about80%. necessitating a fuel input of 150 units (150units of fuel at 80% efficiency equals 120 units ofelectricity and process heat). The co-generationsystem described thus saves 35 units of fuel for afuel-saved ratio of 35/185 or 19%.

CO GENERATION

CO-GENERATING SYSTEM

150

LOSSES

152

SOURCES. CURRENCIES AND TECHNOLOGIES

Despite the advantages in fuel saving, the percent-age of industrial electricity derived from co-generationhas fallen during the twentieth century. In the UnitedStates, industrial co-generation accounted for one-thirdor more of industrial electricity use in 1900; it representsless than 5% today. The explanation is straightforwardand is basicallya matter of economics. With relativelylow fuel costs, steadily improving conversion efficiencies,increasing powerplant size and the reliability of large,multi-unit systems, the utilities could offer industrialpower at lower rates than industry could achieve itself

Co-generation and Process Matching

Figure 6-11: A HYPOTHETICAL CO-GENERAT-ING SYSTEM WITH EXCESS ELEC-TRICAL GENERATING CAPACITY

MATCHPOWER.

REQUIRED ASPOWER y f i i .

MATCHHEAT

//

&/te AUXILIARY

&&BOILERHEAT

O1AJOE

1 RE

QUII

<

1 H

EA

yf

^SELL ELECTRICITY

PROCESS REQUIREMENTSFOR HEAT AND POWER

INCREASING HEAT-

The illustration above represents a co-genera-tion scheme where the ratio of power to heatexceeds that required at the site. The sloped linebeginning at the origin and rising to the rightrepresents a co-generating system of increasingsize. Reflecting the power/heat ratio, the slope ofthe line is characteristic of the system in questionand is a function of the temperature at which heatis required in the process.

In this example, if the co-generating system isselected to match the power requirement, thenthe system does not produce enough heat and anauxiliary boiler must be installed to make up thedeficiency. If the system is designed to match theheat requirement, on the other hand, more electricpower is generated than required at the site andthe excess power must then be sold to a utility.

Industrial Co-generation in Canada

A recent study has estimated that the techni-cal potential for industrial co-generation inCanada exceeds 4,000 megawatts, distributed bysector as shown in Table 6-8. : -

Table 6-8: THE POTENTIAL FOR INDUSTRIALCO-GENERATION IN CANADA

Sector

Potential inElectrical

Megawatts

Pulp and PaperFood and BeverageIron and SteelChemicalsTextilesRefineriesMiningInstitutionalManufacturing

TOTAL FOR CANADA

1,61321114959326

880134196224

4,026

Source: Canada. Department of Energy, Mines andResources, 1980a. p. 51.

Some 1,100 to 1,400 MW of this potentialhas already been developed, notably in the pulpand paper industry and in heavy water production,and an additional 1,400 MW is consideredeconomically exploitable (under conditions pre-vailing at the time of the study in 1977). Com-pared with Canada's total generating capacity ofmore than 77,000 megawatts, the opportunities topursue co-generation now and in the future aremodest but not inconsequential.

Companies such as Dow Chemical andSuncor already operate major co-generationschemes. The Nova Scotia Power Corporationowns two such systems, both supplying processsteam to heavy water plants, and the New Bruns-wick Electric Power Commission owns a unit sup-porting a newsprint mill. Most co-generationschemes in Canada today use natural gas or oil asthe fuel, a situation which will change with time.Coal, petroleum coke and hog fuel (waste wood inthe forest industry) are other fuels presently beingused.

153

through co-generation. Industry was also facing risingcosts for utility backup to co-generation schemes,increased co-generation costs because of new environ-mental regulations, and capital costs of co-generationplants rising to prohibitive levels. While utilities can justi-~fy an extended depreciation period for equipment,industry looks for a more rapid write-off on co-generat-ing systems. Combined heat and power production,despite its fuel savings, simply did not pay.

Given today's rising fuel prices, one can expect areversal in this trend. Nonetheless, difficulties remain.For example, utilities have often charged rather stiffrates for backup services while offering low prices forexcess power produced in co-generating systems. Thisis an important point from the perspective of industrysince only rarely can a co-generation plant preciselymeet the site requirements for both electricity and heat.Such barriers jnay prevent this energy-conserving tech-nology from re-establishing itself in the industrial sectorat anything more than a modest pace.

The barriers to co-generation today are not techni-cal, although the technology will continue to evolve, andpreviously important economic barriers are shrinking asthe price of conventional fuel rises. The prime obstacleto industrial co-generation is now an institutional orattitudinal one.

CONCLUSIONCo-generation is an energy-conserving tech-nology whose importance in the post-warperiod has diminished, largely for economicreasons. Utilities have not been interested inpromoting co-generation because, until recent-ly, there was little reason for them to beinvolved in such schemes. Low electrical ratesfor large users have also discouraged co-gener-ation.

RECOMMENDATIONThe Committee encourages Canadian utilitiesto look more favourably upon co-generationand to devise means for promoting the broaderuse of this technology, possibly through jointownership of such systems with industrialpartners.

C. ALTERNATIVE CYCLES FOR PRODUCING ELEC-TRICITY

New approaches to converting heat into electricpower are under investigation as the pressure mounts to

combat escalating fuel prices. Most of these technolo-gies would be incorporated in combined-cycle systemsand thus warrant brief consideration here.

The steam turbine cycle is the most highly devel-oped system for power generation, with more than ahalf-century of work behind it. Pushing developmentfurther will result in much higher capital costs-andreduced reliability because of system complexity, sug-gesting that a practical limit has been approached.Efficiencies of 40 to 45% have been achieved withextremely high boiler pressures (some 300 times atmos-pheric pressure) and temperatures (more than 600°C orabout 1150°F), incorporating two stages of reheating inthe boiler system. Unfortunately, such extreme condi-tions degrade system reliability and more conservative(and less efficient) designs usually prevail.

Gas turbines operating in a combined cycle canachieve _ efficiencies - about equal to the best steamplants but coupling a gasifier to a ccmbined-cycle tur-bine system might stretch the overal! thermal efficiencyto nearly 50%. This poses a problem, however, as therequired operating temperature exceeds'the capabilitiesof existing turbines.

Another technology — magnetohydrodynamic(MHO) generation — promises to raise the conversionefficiency above 50%. MHD produces electrical powerdirectly in a generator without moving parts. Heatedcombusion gases (at a temperature of some 2600°C orabout 4700°F) are seeded with a metallic compoundand directed at high velocity through a powerful magnet-ic field. This generates a current in the partially ionized(electrically-conducting) gas which is removed by elec-trodes along the inside walls of the MHD generator.Given the high exhaust temperature of such a system, itwill be used as a topping cycle in combined systems.

Although there are still problems to overcome. MHDtechnology has advanced to the stage of engineeringdevelopment in the U.S.S.R. and the United States. Bothcountries are planning commercial powerplants usingcoal for fuel. The Soviet Union expects to bring a 250MW gas-fired topping unit (coupled with a 250 MWbottoming unit) into operation in 1985 and coal-firedMHD units will be introduced in the 1990s. The UnitedStates is planning a 200 MW coal-fired MHD generatorwhich may be operational by the end of the decade. Anumber of other countries are also showing interest inMHD generation but their programs are well behindthose of the U.S.S.R. and the United States.

Other generating cycles are being studied whichoffer efficiencies equal in theory to that of MHD genera-tion and which may prove to be less technicallydemanding. None of these, however, will see broadcommercial application for some time.

154

SOURCES, CURRENCIES AND TECHNOLOGIES

CONCLUSIONIndividual utilities can best identify the oppor-tunities for incorporating advanced energy con-version cycles in their systems as the technolo-gy becomes available. It should be sufficient forthe Government of Canada to monitor develop-ments in this technical area.

2. LOW-HEAD AND SMALL-SCALE HYDRO-ELEC-TRIC GENERATION

Through a blend of old and new technologies, low-head and small-scale hydro-electric generation offersome potential for increasing electrical generatingcapacity in Canada. This can be done by renovating orretrofitting existing facilities and by installing modern,small-scale equipment at locations where the streamflow:and gradient are not adequate for conventional(large-scale) hydro-electric development.

Current estimates suggest that some 122,000 MWof conventional hydro-electric capacity is technicallyand economically developable in Canada and that ofthis amount approximately 44,000 MW has alreadybeen harnessed. Of the remainder, 15,000 MW is underconstruction, leaving some 63,000 MW for future exploi-tation. Most of this undeveloped potential will eventuallybe harnessed by conventional large-scale projects.Nevertheless, there are numerous opportunities for low-head, small-scale, mini-hydro and micro-hydro projects,particularly in remote communities not served by anelectrical grid but where an appropriate hydro site couldbe used to replace diesel-electric generation.

Defining Small Hydro-electric Development

Generally speaking, an installation with acapacity below 100 kW is called a micro-hydroproject: one between 100 and 1,000 kW is knownas a mini-hydro project; and one whose installedcapacity ranges between 1,000 and 15,000 kW iscalled a small-scale hydro development.

Hydro head is the difference in height be-tween water levels immediately upstream anddownstream of a turbine.

In the southern and more populous parts ofCanada, the competition for water resources may limitthe small-scale hydro potential. For instance, waterdemand for irrigation, for recreation and for maintainingnatural stream flows conflicts with storing water forpower generation. In addition, many abandoned reser-voirs have deteriorated beyond the point where it iseconomically feasible to renovate them.

When choosing a site for small-scale hydro develop-ment, a number of considerations must be taken intoaccount. For example, the hydro head determines thewater pressure available to drive the turbines and helpsdetermine the unit cost of electricity produced. The sizeof reservoirs, the rate at which they are replenished andthe cost of their construction also influence the cost ofthe electrical output. The environmental impact of reser-voir flooding must be evaluated before development andefforts made to ensure that construction does notadversely affect water quality and wildlife.- Economicswill favour the isolated community where it would costmore to link it to an existing grid than to develop a local,small-scale hydro site. The Committee visited one suchsite near Hay River in the Northwest Territories.

The Federal Government and many provinces haveexpressed interest in low-head and small-scale hydrodevelopments and surveys of likely sites have takenplace in thefMaritimes, Quebec, Saskatchewan andBritish" Columbia. Initiatives that have gone beyond thestudy-and planning stages are currently underway inNewfoundland, Nova Scotia and Ontario.

Newfoundland signed an agreement with the Feder-al Government in September 1978 to construct a 400kW mini-hydro demonstration project near Roddickton,a small community about 75 km south of St. Anthony onthe Island's Great Northern Peninsula. The project com-menced operation in the fall of 1980, some six monthsahead of its completion date of 1 March 1981, and anappraisal of its practicality and benefits are now under-way. This appraisal will attempt to identify opportunitiesfor simplified construction, installation, control, opera-tion and maintenance of equipment suitable for small-scale hydro development in isolated communities acrossCanada. Efforts will also be made to establish standardtechniques for simplifying site selection. A designmanual will be prepared for use by any provincial gov-ernment interested in constructing a similar facility. The$1,200,000 cost of the demonstration (of which theFederal Government agreed to pay 90%) emphasizesthe comparatively high cost ($3,000 per kilowatt) ofsmall-scale projects, although their economics willimprove as the price of oil continues to rise.

In Nova Scotia there are undeveloped hydro sites inthe 50,000 to 100,000 kW range where large volumes ofwater flow with relatively low heads. To date, it has notbeen feasible either technically or economically to de-velop them. As discussed in the section entitled TidalEnergy, a 20 MW demonstration project is under con-struction near Annapolis Royal to test a large straight-flow (Straflo) turbogenerator with potential tidal andlow-head river applications. Unlike conventional units,the turbine and generator are integrated, with rotorsattached to the tips of the turbine blades. If the demon-stration is successful, low-head waterways acrossCanada may become exploitable for energy.

155

In the Province of Ontario, Ontario Hydro has takena somewhat different approach to small-scale hydropower, emphasizing micro and mini "packaged plants".These can be transported to isolated communities andthe design is simple enough that they can be assembledlocally with a minimum of outside help. A Port Colbornecompany recently introduced two sizes of hydro-electricsystems, known as "tin can powerhouses", which havebeen designed to operate with a head of eight metres(25 feet) or less. This represents a considerable advanceover conventional equipment which requires a minimumhead of some 16 metres (50 feet) to function efficiently.The smaller of the two, called the micro-hydel (hydro-electric) unit, can generate between 15 and 50 kilowattsof power depending upon the site. It includes a turbine,a generator, a gear box, a governor and control circuit-ry. The larger unit, the mini-hydel station, can generatebetween 100 and 1,000 kilowatts. Both units have beendesigned with-ruggedness, reliability, transportabilityand ease of maintenance in mind.

To test the mini-hydel unit, a prototype has beeninstalled by Ontario Hydro on a small dam at WadsellFalls on the Severn River in southern Ontario. This plantis an ungoverned unit with a maximum capacity of 145kW. Its output is fed directly into the southern Ontariogrid. The use of a siphon penstock to draw water overthe top of the pre-existing dam and direct if onto therunner of the unit reduced the cost of the installation.The Wadsell Falls project will establish the economics ofinstalling a small-scale powerhouse in a built-up area. Itwill also help establish the potential of the mini-hydelpower station for use in isolated communities and indi-

cate whether or not it can compete for sales in interna-tional markets.

The mini-hydel unit has control and safety featureswhich make it particularly attractive and a number ofcountries have expressed interest in the technology.Although testing continues, the Port Colborne companyconsiders the program far enough advanced to acceptorders for generating units of up to 750 kilowatt output.

CONCLUSIONContinued increases in the prices of fossil fuelsare making small-scale and low-head hydrolook increasingly attractive. There are cleareconomic advantages in installing sm3ll-scaleunits in isolated communities which rely on die-sel-electric generation and which have littlelikelihood of integration into an electrical net-work for a number of years. Since these sameconditions prevail in many developing coun-tries, the technology offers considerable exportpotential.

RECOMMENDATIONThe Committee recommends that financialassistance be extended to isolated communi-ties which rely upon diesel-generated electrici-ty to enable them to install small hydro unitswhere an appropriate site exists. The Commit-tee further recommends that this technology bevigorously promoted for its export potential.

156

Vv' FUEL CELLS

'S!-'

Figure 6-12: COMPARISON OF ENERGY CON-VERSION PROCESSES IN A FUELCELL AND IN A DIESEL GENERA-TOR

DIESELGENERATOR FUEL CELL

CHEMICAL ENERGY

ELECTRICtTY

Source: Crowe. 1973. p. 3.

water. Fuel cells of the direct type utilize pure H2 and O2

which have been produced independently whereas cellsof the indirect t yp j are combined with a hydrogen-generating unit which can produce hydrogen from awide variety of fuels.

2. ADVANTAGES AND DIFFICULTIES IN USINGFUEL CELLS

In addition to the high efficiency and hence energy-conserving character of fuel cells there are other fea-tures which make them attractive as well. Being veryclean in operation, they represent an environmentallyappealing means of generating power and can be usedin urban settings with little worry about emissions. Infact, the only emissions from fuel cell operation otherthan air and water are from the operation of the fuelprocessor which is used to generate hydrogen.

Another attractive characteristic of fuel cells is thatthey are modular in form and can be assembled in onelocation and then shipped to the place of installationwith no costly on-site building required. This feature alsomeans that they can be added to or subtracted fromexisting installations as power requirements change.Used in urban settings for electrical generation, fuel cellsreduce the costs of acquiring land and building transmis-sion lines and can consequently conserve energy by

The Principle of Fuel Cell Operation

The most common fuel cell is the phosphoricacid type and it serves to illustrate the basicoperating principle of these devices. It consists oftwo electrodes which sandwich between them alayer of phosphoric acid. The phosphoric acid iscalled an electrolyte, the word used to describe anon-metallic electric conductor in which current iscarried by the movement of ions instead of elec-trons. (There are other types of fuel cells whichmake use of different electrolytes, but they are 5to 10 years behind in development.)

A hydrogen-rich gas passes over the negativeelectrode and the positive electrode is exposed toan oxygen-rich gas. The hydrogen gas is split intohydrogen ions (positively-charged hydrogenatoms) and electrons at one electrode with thehelp of a catalyst, usually a noble element such asplatinum. The hydrogen ions pass through theelectrolyte towards the oxygen and the electronsflow through an external circuit towards theoxygen where they chemically react to form water.The movement of the electrons through the exter-nal circuit creates a direct or DC electrical current(Figure 6-13). This process of converting chemicalenergy into electricity is termed an electrochemi-cal reaction.

The level of current depends upon the rate ofthe water-forming reaction and upon the surfacearea of the electrodes where the reactions takeplace. To increase voltage to utifeable levels,individual cells are assembled into stacks and byconnecting stacks in series or parallel, the amountof power which can be generated is furtherincreased.

Figure 6-13: SCHEMATIC REPRESENTATIONOF A FUEL CELL

FUEL (HYDROGEN RICH GAS)

CATHODE

HAN,

Source: After Ficketl. 1978. p. 72.

AIR(0,)

158

SOURCES. CURRENCIES AND TECHNOLOGIES

eliminating the losses which are inherent in electricaltransmission. Finally, having no moving parts, fuel cellsare virtually noiseless in operation making them attrac-tive for use in the transportation sector, particularly inurban areas. " - - - • =

~ Despite these advantages, however, the cost of thistechnology must be further reduced to make it competi-tive. The development of less expensive electrodes witha longer operating life is a major factor in reducing fuelcell costs. Emissions associated with fuel processing areunlikely to cause environmental concern because sul-phur removal equipment must be a subsystem of anyfuel processor supplying hydrogen to a cell. Precautionswould of course always have to be taken with thevarious acidic or alkaline electrolytes which can be usedin fuel cells. ---;

- Fossil fuels (in particular natural gas, light petroleumfractions or liquefied petroleum gases) are very adapt-able for use with fuel cells, but they must all be convert- :

ed into a hydrogen-rich gas to feed the cell. This couldlimit the use of fuel cells which operate on fossil fuelsbecause the processing equipment required for utility-sized installations would be costly. Synthetic fuels suchas hydrogen, methanol or synthesis gas would be par-ticularly attractive for smaller-scale fuel cell applications.

One attractive option for fuel cells used in vehiclesis to run them on methanol, which the Committeerecommends developing in Canada as an alternativeliquid transportation fuel. Methanol can be converted tohydrogen easily and storing H2 in this form overcomessome of the problems encountered in designing on-vehi-cle, hydrogen-carrying systems.

3. INTERNATIONAL AND CANADIANDEVELOPMENT

Numerous programs are established in the UnitedStates to study fuel cell design, operation and applica-tion but research seems aimed primarily at developing atechnology which can be used for utility-size electricalpower production. Some experiments for motor vehicleand space research application are being done as well,but these are limited.

Sweden has no natural gas or oil so its interest isdirected primarily at developing fuel cells which canutilize hydrogen derived from biomass or peat feed-stocks. The Swedes believe that fuel cells offer anattractive alternative energy technology in their countrybecause the high reactivity of biomass in pyrolysis/gasification processes (see section on Biomass) permitseasy generation of a hydrogen-rich gas which can runthe cells. Moreover, the modular character of fuel cellsmakes them adaptable to a widely-dispersed resource

base like biomass. Figure 6-14 schematically representsa fuel cell electrical generating system employingbiomass (including peat) as a feedstock.

Figure 6-14: A FUEL CELL ELECTRICAL GENE-RATING SYSTEM EMPLOYING

" BIOMASS AS A FEEDSTOCK

SOLAR ENERGYPHOTOSYNTHESIS

BIOMASSHARVEST H 7BANSP0R- I i ^

TATON I w ?STORAGEAT PLANT

A

CO,

TRANSFORMER

Ij fflRECT CURRENT/

<^IZ ALTERNATWGCURRENT

HEATEXCHANGERS

VELECTRICITY

CONSUMERHOT WATERCONSUMER

Source: Lindström el al, 1979, p. 1178.

CONCLUSIONThe Committee recognizes that the high effi-ciency of fuel cells makes them attractive as anenergy-conserving technology and that theyhold the potential for allowing an increased useof Canada's biomass and peat resources.

RECOMMENDATIONThe Committee recommends that research onfuel cells be funded as part of a commitment todeveloping a hydrogen economy for Canada. Inparticular, the development of fuel cells for thetransportation sector should be given high pri-ority as their use promises to substitute fortransportation fuels, to reduce vehicle exhaustemissions and to develop a market forhydrogen.

159

At extremely high temperatures, atoms are com-pletely ionized and the resulting mixture of bare nucleiand free electrons is termed a plasma. Most of theknown universe, with minor exceptions like the Earthand other planets, is a plasma. For such a conglomera-tion of charged particles to sustain a fusion reaction,

however, special requirements of temperature, densityand confinement time must be met. Thus to create a"miniature star" in the laboratory, scientists must estab-lish a unique environment.

Atoms and Isotopes and Other Such Things

Atoms are made up of three fundamentalparticles. Positively charged protons anduncharged neutrons comprise the atom's nucleus;_which is orbited by negatively charged electrons.Virtually all of the atom's mass is concentrated inthe nucleus. -_.•"."

Atoms in their normal state possess equalnumbers of protons and electrons and are there-fore electrically neutral. When suitably excited,however, an atom can lose or gain electrons,thereby acquiring a net electrical charge. Chargedatoms are called ions and radiation which is cap-able of stripping electrons from atoms is termedionizing radiation. Ionizing radiation is not good forone's constitution (nor for one's descendents).

The number of protons in the nucleus deter-mines the atomic species. An atom containing oneproton is hydrogen. An atom with 8 protons invari-ably is oxygen, and one with 92 protons is urani-um. Electrons determine the atom's chemicalcharacter.

Although the number of protons in an ele-ment is fixed, the number of neutrons is not. Totake a simple example, hydrogen can exist inthree forms with either zero, one or two neutronsin the nucleus. The first two variants, or isotopes,are called protium and deuterium. Tritium, thethird variant, is unstable and reverts to helium overa number of years.

There exist in nature some elements thatspontaneously decay, or disintegrate, into lighterones, accompanied by a release of energy. Suchelements are said to be radioactive. Man hasadded to naturally-occurring radioactivity in deto-nating nuclear devices and in operating fissionreactors. Whether naturally occurring or man-made, radioactive elements decay at a fixed ratecharacteristic of the element in question. The half-life is the time during which one-half of a quantityof a given radioactive substance will spontaneous-ly disintegrate, forming new atomic species. Forexample, given four units of tritium whose half-lifeis 12.3 years, two units of tritium (plus decayproducts) will remain after 12.3 years and one unitafter 24.6 years.

Conditions for a Sustained Fusion Reaction

• The fusion fuel-must be heated and maintained -at a temperature near its ignition point — thetemperature at which the reaction will proceedwithout further heat input. '

• The plasma must be confined for a sufficienttime to ensure that the energy (heat) from thereacting fuel is greater than or equal to theenergy supplied to heat and confine the plasma.

• The plasma must have a sufficient density toensure that the ions are close enough for thereaction to occur. (The density is defined as thenumber of ions per unit volume of plasma:) _Theminimum product of time and density to achievethe fusion condition can be expressed as athreshold requirement, called the Lawson Prod-uct after its formulator, physicist J.D. Lawson.

The fusion reaction for which the required condi-tions can most readily be met is that of two hydrogenisotopes, deuterium (D) and tritium (T), combining toform helium. Other possible reactions require evenhigher plasma temperatures than D-T fusion. Materialconfinement of the fusion plasma is, of course, out ofthe question — the reactor wall would be instantlyvapourized by contact with the plasma and, at the sametime, chilling of the fusion fuel would stop the reaction.There are nevertheless three known physical mech-anisms for containing a high-temperature plasma: gravi-tational confinement, inertial confinement and magneticconfinement.

Gravitational confinement works marvelously well inthe sun, so well in fact that a more difficult fusionreaction takes place at lower temperatures than faceman in achieving D-T fusion. Since the Earth's gravita-tional field is trifling by cornoarison, however, this is nota relevant research approach.

In inertial confinement, the temperature and densityof a plasma fuel droplet are raised so rapidly that asignificant fraction of the fuel reacts before it has time todisperse. The heating is achieved with laser or particlebeams dumping huge amounts of energy into the drop-let in billionths of a second.

Magnetic confinement takes advamage of the factthat the plasma consists of charged particles. Magneticfields are employed to constrain or reflect the particles

162

SOURCES. CURRENCIES AND TECHNOLOGIES

Fusion Reactor Configurations — Closed Magnetic Confinement

Figure 8-15: SCHEMATIC REPRESENTATION OF A TOKAMAK REACTOR

POLOIDAL FIELD COILS

SHIELDING

•TOROIDAL FIELD COIL

IONSOURCES

NEUTRAL BEAM'INJECTOR

Source: After The Princeton University Plasma Laboratory: An Overview. 1979, p. 8.

The fusion reactor configuration with thelongest history of development is the Tokamak,named after a device with which the Russians didsome pioneering research on plasma stability. TheTokamak involves closed magnetic confinement ofa plasma in a torus (doughnut-shaped chamber)maintained at a high vacuum. Three different mag-netic fields, or sets of fields, act to confine theplasma within the torus or vacuum vessel. Thetoroidal magnetic field is the basic confining field,and the poloidal field forces the plasma towardthe middle of the torus. To maintain plasma equi-librium and stability, a third set of magnetic fields

is generated by smaller coils along the peripheryof the torus.

Various means can be used to add energy tothe plasma. In the Princeton TFTR (TokamakFusion Test Reactor) pictured above, high-energy,neutral-particle beams will carry energy into theplasma and provide the extra heat required toreach ignition temperature. To give an idea ofscale, the torus or vacuum chamber for TFTR willbe 1.7 metres in diameter and almost 8 metresacross. TFTR is designed to achieve scientificbreakeven and is scheduled to be operational in1982.

163

Fusion Reactor Configurations — Open Magnetic Confinement

Figure~6-16: SCHEMATIC REPRESENTATION OF A TANDEM MIRROR MACHINE

NEUTRAL BEAMS

GAS FEED

END CELL(PLUG)

BASEBALLCOIL

NEUTRAL BEAMS

END CELL(PLUG)

BASEBALLCOIL

Source: After Selected Articles on Magnetic Fusion Energy from Energy & Technology Review, 1979, p. 13.

The other major category of magnetic con-finement devices is the "open" configuration(which does not close in on itself like a Tokamak).In essence, open machines are cylindrical plasmacontainers with a solenoid?.! magnetic field aroundthe cylinder and confining fields at the ends of thecylinder to reduce plasma losses. The end fieldsact as "magnetic mirrors" n reflect charged parti-cles. At the present time, three magnetic mirrorconcepts are being studied: the tandem mirror(shown above), the field-reversed mirror and thebumpy torus (which links a series of simple mirrors

into a circle in a hybrid design joining open andclosed configurations in magnetic confinement).

A large tandem mirror, MFTF (Mirror FusionTest Facility), is under construction at LawrenceLivermore Laboratory in California. As schemati-cally illustrated above, energy will be added to theplasma by neutral beam injection at the end cells.To give an appreciation of scale, the cylindricalfusion chamber in the MFTF is 18 metres long.Operation of the machine is expected by late1981.

164

SOURCES, CURRENCIES AND TECHNOLOGIES

Fusion Reactor Configurations — Inertial Confinement

Figure 6-17: SCHEMATIC REPRESENTATION OF A LASER FUSION MACHINE

NEODYMIUM GLASS LASERSTARGET

CHAMBER

Source: After "Laser Fusion", 1977, p. 13.

Apart from magnetic confinement, the otherapproach to containing a high-temperatureplasma on the Earth is by means of inertial con-finement. This latter technique seeks to intenselyheat a tiny pellet of fusion fuel so rapidly that thefuel burns as a plasma before it can disperse.Extreme heating of the surface of fhe fuel pelletcauses it to implode; the high plasma densitythereby achieved allows the fusion reaction to beestablished for a very small fraction of a second.The problem is to deliver a huge pulse of energy toa tiny target in less than a billionth of a second.Two approaches to achieving these conditionsinvolve heating with high-power lasers or withhighly-energetic particle beams.

The device illustrated in Figure 6-17 is theShiva laser fusion facility at Lawrence LivermoreLaboratory. In this installation, 20 neodymiumglass lasers deliver energy to a fuel pellet insidethe target chamber. Success with the Shivasystem has been such that the facility is beingdoubled to include a second laser bay. Theexpanded system, called Shiva Nova, is expectedto demonstrate scientific breakeven. The Shivalaser operates at a power level of 20 to 30 tera-watts; Shiva Nova will produce 190 to 285 TW ofpower and the expanded facility will approximate-ly cover the area of a football field.

165

in attempting to confine the plasma long enough for afusion reaction to take place.

Both magnetic confinement and inertial confine-ment are being vigorously pursued in a variety of reactorconfigurations, with spending on magnetic confinementhaving dominated the field to the present time. Each ofthe three conditions (temperature, density and confine-ment time of the plasma) for controlled fusion has beenseparately achieved and the research drive now centreson bringing all three conditions together in one fusiondevice.

Scientific breakeven — the point at which as muchenergy is released by the fusion reaction as is put intothe plasma to heat it — is expected to be achievedbefore 1985 in fusion machines under construction atthe present time. That achievement, however, will stillonly have demonstrated the scientific principle. Requir-ing solution thereafter are the engineering problemsinvolved in deriving a commercial fusion device. Engi-neering breakeven — defined as the stage at which totalenergy out of the fusion system equals or exceeds totalenergy into the system — is expected by many researchworkers to be reached by 1990. The consensus is that ademonstration commercial fusion reactor can be operat-ing by early in the twenty-first century.

The three possible applications of fusion energywhich receive the most attention in research today arethe production of electricity, of fissile fuels in fusion-fis-sion hybrid reactors, and of process heat. In the firstapplication, the energetic fusion products generate heatupon absorption in the reactor wall, with the thermalenergy then used to produce steam and drive conven-tional turDcgenerators. In the second application, thefusion neutrons convert fertile materials such as thoriuminto fission reactor fuel. Thirdly, waste heat from electri-cal generation in a fusion facility could be exploited, asis the case with other powerplants, for industrial processheat, for district heating or for greenhouse agriculture orhydroponics. A number of other applications have beenproposed, such as the use of fusion energy in one ofseveral ways to produce hydrogen.

2. ADVANTAGES AND DIFFICULTIES IN USINGFUSION ENERGY

The potential benefits of fusion energy are per-ceived by some governments to be so great that morethan $2 billion is now being spent annually on R&D in theUnited States, Europe, the Soviet Union and Japan.While the promise of almost unlimited energy from thefusion process is alluring, this energy source is the fur-thest from commercialization of any we have consideredand by a large margin it will be the most expensive todevelop.

• Fusion offers the possibility of providing a virtuallylimitless supply of energy based upon a fuel availableto all countries. It is one of the very few energysources with the potential to broadly handle man'senergy requirements in his long-term occupation ofthe planet.

• Proper design of fusion reactors should reduce thegeneration of radioactive by-products to levels farbelow those of fission reactors. The fusionby-products would also have shorter half-lives thanfission by-products.

• Fusion activation products are nonvolatile whereas asubstantial fraction of fission activation products arevolatile. Controlling radioactivity in the event of anaccident should therefore be easier in a fusionreactor.

• The fusion reaction does not generate chemical com-bustion products and in that sense represents abenign energy technology.

• Materials used and by-products generated in a com-mercial fusion reactor would not lend themselves tothe production of nuclear weapons.

• The development of fusion power systems, by virtueof their complexity and highly demanding engineeringdesign, will promote technological advances withapplication in other industrial sectors.

• Although Canada is only marginally involved in fusionresearch today, there are areas of the technologywhere this country could benefit from making a largercontribution to the international effort.

While the potential benefits of commercial fusionenergy are indeed great, there is also no other alterna-tive energy source facing as many difficulties in itsexploitation.

• The technology to exploit fusion energy on a broadcommercial basis is not yet in place and many expertsbelieve that 20 years or more will be required to reachthat goal. This is a time span beyond the planninghorizon of most organizations and a conventionalcost/benefit analysis therefore cannot be made. It isdifficult for industry in particular to commit funds on alarge scale to such research when the return is sotentative.

• The cost of commercializing fusion energy will betremendous. More than two billion dollars was spentworldwide last year on fusion research and one experthas ventured the guess that required,fusion RD&Dmight ultimately cost some $50 billion. Progress there-fore depends on heavy financial commitments bygovernments.

• It has yet to be determined whether chronic exposureto the powerful electromagnetic fields characteristic of

166

SOURCES, CURRENCIES AND TECHNOLOGIES

fusion reactors constitutes a health hazard forworkers.

The large-scale use of lithium for tritium breeding inwhat is expected to be the first commercial fusionprocess poses a hazard since lithium is chemicallyvery active.

Tritium management is a sizable challenge since thisradioactive isotope of hydrogen is as mobile in theenvironment as common hydrogen.

Extremely demanding vacuum requirements in thereaction chamber must be met, the reactor structuremust last under intense bombardment from highlyenergetic neutrons, and materials must resist largestresses imposed by powerful magnets and steeptemperature gradients. Despite this hostile operatingenvironment, the various elements of a fusion powersystem must function with high reliability for longperiods of time. Such engineering problems form amajor barrier to the successful commercialization offusion power systems.

• Fusion reactors could require appreciable quantitiesof scarce materials; for example, helium used as acoolant; beryllium incorporated in the "blanket" sur-rounding the fusion chamber; and niobium (columbi-um) utilized in superconducting magnets. The highoperating temperatures of the reactor also favour theuse of materials such as vanadium and molybdenum.Canada is fortunate though in possessing consider-able resources of some of these elements.

• Because of its expense and complexity, the commer-cialization of fusion energy will be achieved in theindustrialized world. Other nations wishing to adoptthis technology will have to purchase it, making somecountries technically dependent on others.

• Some observers are concerned that in the rush toharness fusion energy, the best fusion system will notnecessarily be the one commercially deployed.

• Although the prospect today is that fusion energysystems will be much more environmentally appealingthan fission systems, the public may neverthelesstransfer its apprehension over "nuclear power" fromone process to the other.

3. INTERNATIONAL AND CANADIAN DEVELOP-MENT

Any one country would find the cost of developing afusion energy system high, and fusion research hasprogressed with international cooperation which has en-abled the sharing of technological breakthroughs. TheInternational Atomic Energy Agency and the Internation-al Fusion Research Council are two of the bodies whichcoordinate fusion research and which share research

results and information. Joint projects also are common:Japan is planning to invest $250 million in an Americanproject, and the U.S. is investing $50 million in a WestGerman program. Estimates of funding in 1980 for themajor foreign fusion programs are indicated in Table6-9. .

Table 6-9:

Country

U.S.A.

U.S.S.R.

EuropeanCommunity(EURATOMJapan

THE INTERNATIONAL FUSION R&DPROGRAM IN 1980

EstimatedFusionR&D

Budget(millions)

$ 600

$1,000

$ 500

$ 400

MajorMagnetic

ConfinementFacilities UnderConstruction

Tokamak FusionTest Reactor(TFTR) atPrincetonT-15 ExperimentalreactorJoint EuropeanTorus (JET)

JT-60

EstimatedCompletion

Date

1981-82

1984

1983

1984

Source: Personal communication, National ResearchCouncil, 1981.

These amounts indicate the active pursuit of fusionR&D in the technologically developed nations. Whencompared to fission budgets, the U.S. and Japan spendthe equivalent of more than 25 % of their fission budgetson fusion, the European Community about 10% andGreat Britain 1 1 % . Other nations including Australia,South Africa, Spain, Brazil and Argentina are alsobecoming involved in fusion R&D.

Four projects in the construction phase today areexpected to establish the scientific feasibility of themagnetic confinement approach to fusion power: TFTRin the United States, JET in Europe. T-15 in the SovietUnion and JT-60 in Japan. These experimentalmachines should provide conclusive information on howto achieve ignition in a D-T plasma. This generation ofmagnetic confinement machines must then be followedby one or more experimental reactors dedicated toestablishing the technological feasibility of fusion powerand then by demonstration reactors to assess the eco-nomic practicality of fusion.

In 1978, the International Atomic Energy Agencyproposed an international project to tackle the nextphase of technological feasibility. The result was theINTOR (International Tokamak Reactor) Workshop, withthe parties to the Workshop being the European Com-munity (through Euratom), the United States, the USSR

167

and Japan. The Workshop established the specificationsof such a fusion device and recommended that it beconstructed and put into operation by the late 1980s orearly 1990s. INTOR was to require 200 electrical MW ofpower to operate and was to produce a total fusionpower of about 620 thermal megawatts. Controlledplasma burn was to extend for at least 100 seconds.

For a while there was speculation that INTOR mightbe built in Canada but the Soviet invasion of Afghanis-tan appears to have killed the project. The United Stateshas been reexamining its own program in the light of thisdevelopment to see how it should best proceed to thetechnological feasibility stage.

Canada spent $19 million on fusion R&D in 1979-80. This sum comprised $0.3 million from the FederalGovernment for the 1979-80 National Fusion Programand $0.9 million for the in-house Laser Fusion Group atNRC, augmented by $0.7 million from Provincial Govern-ments and utilities. International groups involved wiihlhedevelopment of fusion energy do not consider this levelof support to be a serious contribution to the interna-tional fusion research effort.

Canada, permitting access to international work andallowing Canadian industrial participation in the develop-ment of commercial fusion power systems. The spend-ing program outlined includes funding by both the Fed-eral and Quebec Governments for the new Tokamakfacility at Varennes.

The Federal Government did not support fusionR&D at the recommended level of $4.2 million in fiscalyear. .1980-81. Although the NRC Laser Fusion Groupdid receive $1.2 million, only $1.3 million was forthcom-ing for the National Fusion Program, of which $1.0 mil-lion represented the initial Federal contribution towardsconstructing the Varennes Tokamak. Consequently only$300,000 was available in the National Fusion Programlast year to support project definition studies, to pro-mote work in the particularly important area of materialsresearch, and to^support Canadian scientists in gettinghands-on experience with fusion machines abroad. Thislevel of funding is well below the investment being madecollectively by several provinces, principally throughtheir electrical utilities.

Table 6-10: RECOMMENutiJ EXPENDITURES ON A CANADIAN NATIONAL FUSION PROGRAM

All values are given in millions of 1979 Canadian dollars.

FISCAL YEAR

Federal Funds forNational FusionProgram

NRC In-houseLaser FusionGroup

Total FederalFunds

Other Sources ofFunds for NationalFusion Program'3»

Total Funding

79/80

0.3

0.9

1.2

0.7

1.9

80/81

3.0

1.2

4.2

1.8

6.0

81/82

6.0

1.5

7.5

6.5

14.0

82/83

9.0

2.0

11.0

12.0

23.0

83/84

12.0

2.0

14.0

14.0

28.0

84/85

15.0

2.0

17.0

8.0

25.0

85/86

12.0

2.0

14.0

3.0

17.0

86/87

12.0

2.0

14.0

3.0

17.0

87/88

12.0

2.0

14.0

3J)17.0

<a> Includes provincial governments, utilities and foreign sources.

Source: Canada, National Research Council, 1980, p. 10.

The National Research Council has proposed abudget for a Canadian National Fusion Program which itconsiders to be just sufficient for Canada to attaininternational recognition as making a significant effort >nfusion research. Details of this funding are presented inTable 6-10. The recommended program is intended todevelop scientific and technological expertise in

The NRC has suggested that our fusion researcheffort would best entail a three-pronged approachbecause of unique Canadian resources. First, Canadaenjoys international recognition for its gas (CO2) laserresearch which is relevant to the inertial confinementapproach to fusion systems. Second, with the VarennesTokamak, Canada will be in a position to contribute to

168

SOURCES. CURRENCIES AND TECHNOLOGIES

the magnetic confinement program. (Studies leading tocommercial cycles of operation and to the coupling of afusion facility to an electrical grid are planned for thisfacility.) Third, Canada should specialize in one or twocarefully selected engineering technologies associatedwith fusion power systems. In this latter respect, particu-lar interest should be paid to the management of tritiumwhich will be required as a fuel for the first-generationcommercial fusion plants. Ontario Hydro already hasextensive practical experience in this area.

CONCLUSIONEvidence put before the Committee stronglysuggests that fusion will be harnessed in com-mercial power systems early in the twenty-firstcentury. Although the Committee cannot identi-fy a time at which the Canadian energy systemwould require the input of fusion energy, we

nonetheless anticipate that substantial benefitswould flow from participation in the internation-al program to commercialize this energy form.Those benefits will not accrue to Canada at thepresent level of support of fusion R&D in thiscountry.- '"""

RECOMMENDATIONThe Committee recommends that the programof expenditures proposed by the NRC AdvisoryCommittee on Fusion-Related Research beadopted by the Federal Government. For thefive-year period from fiscal year 1980-81 to1984-85, this represents an expenditure ofapproximately $54 million (in constant 1979dollars). An independent review should be car-ried out in the third year of the program andafter five years to determine its effectiveness, -

169

exception being the immense lava outpourings that havecreated the Hawaiian Islands. It is not surprising there-fore that much of the emphasis on developing geother-mal resources has been concentrated in these higher-energy zones of the Earth's crust, in such countries asItaly, Iceland, the (western) United States, Mexico,

_Japan, the Philippines and New Zealand. The principalexception to this correlation has been the exploitation"by several European nations of hot groundwater con-tained in deep sedimentary basins.

Geothermal Gradient and Heat Flow

" The term geothermal gradient refers to therate at which temperature increases with depth inthe Earth. Averaged over the planet, the geother-mal gradient is roughly 25° to 30°C per kilometre(approximately 15°F per thousand feet). For thisreason deep mines are hotter than shallow minesand require more elaborate ventilation systems.Similarly, drilling operations become more difficultwith depth as the equipment has to withstandprogressively higher temperatures.

Heat flow refers to the quantity of heat cross-ing a unit area of the Earth's surface per unit oftime — the mean thermal flux over the Earth'scontinental regions is about 62 milliwatts persquare metre.

Plate TectonicsPlate tectonics is the name for a theory which

considers the outer layer of the Earth to be divid-ed into a dozen or more large plates "floating" ona viscous underlayer. These plates, which maycomprise both continental and oceanic rocks,move in response to poorly understood internalforces, at rates of several to ten or more cen-timetres per year.

Plates may move laterally past each otheralong boundaries termed transform faults (asalong the San Andreas Fault system in California),or override one another at subduction zones (asappears to be occurring at the deep-ocean tren-ches in the Western Pacific and beneath theHimalayas in Asia). Ocean ridges in this schemeare zones along which new crustal material iscreated, with plates moving outwards from theseaxes of seafloor spreading to be reabsorbedwithin the Earth along the subduction zones.Figure 6-18 displays the major crustal plates.

Earthquakes can in most cases be regardedas the result of interactions at or near plateboundaries.

The Earth's average rate of heat loss over 1,000square metres is roughly equivalent to that amount otenergy required to light a 60 watt bulb. Given this lowrate of delivery of heat at the Earth's surface, mansearches for regions of the crust where thermal energyexists in anomalously high concentrations. Utilizing geo-thermal energy thus becomes a two-component prob-lem. Where can the highest temperatures be found atthe shallowest depths? And, can useful energy beextracted at a viable rate from a given geothermal"deposit"?

Five approaches to utilizing geothermal resourceshave been identified: (1) producing geothermal-electrici-ty; (2) using lower-grade heat for space heating andsimilar applications not requiring the conversion of ther-mal energy to another form; (3) producing fresh water;(4) extracting minerals from geothermal brines; and (5)recovering methane from geopressiired deposits. Thefirst two of these „applications are the subject of de-velopment tests in Canada.

2. ADVANTAGES AND DIFFICULTIES IN USINGGEOTHERMAL ENERGY

Many advantages accrue to the use of geothermalenergy, even considering the limited range of depositsbeing exploited today.

• Land disturbance is less than for most other energyalternatives and restoration is comparatively easy.

• Geothermal development does not require large quan-tities of materials and energy, and the entire operationis localized.

• With a moderate degree of effort, the environmentalimpact of geothermal development should be minor.

• Geothermal energy is available continuously and canprovide base-load power, giving it an inherent advan-tage over such intermittent sources as solar, wind andtidal energy.

• Low-temperature heat from geothermal deposits isdirectly usable in such applications as space heatingand crop production, providing an efficient matchbetween energy source and end use.

• As potentially exploitable deposits occur in morediverse geological environments than does petroleum,for example, geothermal energy may afford certaincountries economic and political benefits.

• The technology for geothermal development is not assophisticated as that required for energy sources suchas nuclear fission, thus it may be a more appropriateoption for many developing countries.

• Geothermal powerplants are limited in size and areeasier to incorporate into small electric power systems

172

Figure 6-18: THE LOCATION OF PRINCIPAL ACTIVE VOLCANOES AND HIGH-ENERGY ZONES IN THE EARTH'S CRUST

EURASIANPLATE

Fujiyama

LIPPINE

ATLANTIWÏCEAN 'y.Pelée

Kilauea paricuti

PACIHC PLATE COCOS PfcA

PACIFIC OCEANNAZCAPLATENDIAN OCEAN

SOUTHAMERICAN PLA^ S T R A U A N PLATER

ANTARCTIC PLATE

Subduction zoneRidge axisTransform faultVolcano

Source: FromEARTH, Second Edition, by Frank Press and Raymond Siever. W.H. Freeman and Company. Copyright © 1978.

Classifying Geothermal Resources

No generally accepted classification of geo-thermal resources has yet emerged. To reviewCanada's geothermal potential we have adoptedthe following categorization:

HYDROTHERMAL DEPOSITS

Convecting Systems

dry-steam systemshot-water systems

Sedimentary R^arvoirs

Geopressured Deposits

HOT, DRY ROCK DEPOSITS

MAGMA SYSTEMS

Hydrothermal deposits are any undergroundsystem of hot water and/or steam contained infractured or porous rocks. In convecting systems,heat if. transferred by the circulation of water orsteam rather than by thermal conduction throughsolid rock (conduction being a very much slowerprocess of heat transfer). Convection can occur inhighly permeable or fissured rocks, with heatedfluids rising in part of the system and densercooler fluids descending elsewhere. Hydrothermalconvecting systems can in turn be subdivided intodry-steam and hot-water systems.

Dry-steam deposits produce superheatedsteam with little or no associated liquid and, whilerare, represent the best opportunity for the pro-duction of electricity since steam can be pipeddirectly into a turbine. The Geysers field in north-ern California is a dry-steam reservoir with thegreatest geothermal-electric potential of anydeposit yet discovered.

Much more commonly, convecting systemsare controlled by circulating hot water. Thosecontaining water above 150°C are candidates forelectric power production, with cooler depositsbeing better suited for space and process heating.Examples of hot-water systems being exploitedfor electric generation are Wairakei in New Zea-land and Cerro Prieto in Mexico. An example of alower-temperature system being tapped is thatunderlying Reykjavik in Iceland where geothermalwater is used for space heating.

Sedimentary sequences thousands of metresthick have accumulated in many regions of the

world and these reservoirs may contain hugevolumes of water warmed simply by the normalincreasing of temperature with depth. As watertemperatures are characteristically less than100°C, these geothermal deposits are oftenreferred to as warm-water fields. In contrast to thefluids in convecting systems, the water in deepsedimentary reservoirs is typically slowly circulat-ing or virtually static. Warm-water fields have beenutilized in Hungary and the Soviet Union for manyyears, principally for space heating and inagriculture.

Geopressured systems, or reservoirs ofabnormally high pressure, are also a form of sedi-mentary deposit. Their characteristics and poten-tial for exploitation are sufficiently different, how-ever, to warrant separate consideration. Thepresence of natural gas in certain of these depos-its increases the incentive to develop them.

Hot, dry rock deposits are the second majorcategory of geothermal resource. In some areas ofthe world rock masses of elevated temperatureare found at shallow depths and there are twoexplanations for such rocks being hotter thannormal. Geologically recent intrusions of moltenmaterial into the Earth's crust may have takenplace with these intrusions raising the temperatureof surrounding crustal rocks. Or the rock massmay contain above-average concentrations ofradioactive elements. If the rocks described con-tain little or no water, the system is said to be dryand exploitation of the energy is made difficultbecause a heat transport medium is lacking. If apractical method of extracting the thermal energyis developed, the potential of this resource will bevery large.

Magma systems are emplacements of moltenrock in the Earth's crust, ranging in temperaturefrom about 600° to 1,500°C (roughly 1,100° to2,700°F). The energy contained in such systems isimmense but the problems in extracting it areformidable, and exploitation of magmatic heat isstill hypothetical.

Present commercial developments exploiteither convecting systems or sedimentary reser-voirs. Geopressured deposits and hot, dry rockdeposits are expected to be utilized commerciallybefore the end of the century, but magma systemsdo not hold any near-term prospect for use.

than are central generating stations where economiesof scale dictate larger units. Even smaller geothermal-electric generating devices (portable, self-contained

power conversion systems in the one to ten megawattrange) are being considered for operation at geother-mal wellheads.

174

SOURCES, CURRENCIES AND TECHNOLOGIES

Many of the difficulties involved in using geothermalenergy are technical or economic in nature. The environ-mental impact is generally local and may be controlledwith proper planning. Impediments to geothermalresource usage are listed below.

_• Drilling for geothermal resources is more difficult than- drilling for petroleum because of the higher tempera-_ tures encountered, accelerated wear on equipment,

increased danger of blowouts, and more frequent lossof drilling fluids.

• The lack of Knowledge about the production charac-teristics and longevity of geothermal reservoirs makesthe economic analysis of geothermal exploitation,difficult.

• Land subsidence from the withdrawal of subsurfacefluids can be a significant problem. (This phenomenonis well known in petroleum production and, in sensitiveareas, water is reinjected to replace the oil produced,thus preventing most of the subsidence.) In NewZealand's Wairakei field, where geothermal water isdischarged into a river rather than reinjected, max-imum subsidence has exceeded 3.7 metres (12 feet)and an area of more than 65 square kilometres (25square miles) has been affected.

• Geothermal development produces high noise levelslocally, especially in dry-steam fields.

• Water pollution can occur in any phase of develop-ment, as toxic or highly saline geothermal fluids arecapable of contaminating surface waters or thegroundwater supply.

• Geothermal fluids typically contain gaseous sub-stances which can cause serious local air pollutionproblems and the requirement for advanced emissioncontrol systems can make exploitation of a geother-mal deposit substantially more expensive.

• Low system efficiencies (in the conversion of thermalenergy to electrical energy) result in geothermal pow-erplants emitting large quantities of waste heat perunit of electric power generated. A typical generatingunit in The Geysers, for example, requires roughly 785megawatts of thermal energy to produce 110 electri-cal megawatts, a conversion efficiency of about 14%.

• Pressurized hot water can dissolve surprisingly largequantities of material which may cause rapid scalingin or severe corrosion of the plumbing in geothermalfacilities. Thus maintenance and ultimate project costsare raised.

• The exploitation of geothermal energy must takeplace locally as the cost of transporting steam or hotwater rapidly exceeds the value of their recoverableenergy.

• Geothermal power provides no siting options, unlikemore conventional energy technologies, because theplant must be near the reservoir. This means geother-mal development may result in land-use conflicts inareas which also have recreational value or scenicappeal.

• Geothermal development for electric power produc-tion is a. costly endeavour with existing technology.While electricity derived from dry-stëam deposits iseconomically attractive today, power produced fromthe much more commonly occurring hot-water sys-tems is often not competitive.

• Legal and institutional problems can impede develop-ment of this resource, as has occurred in the UnitedStates.

3. INTERNATIONAL AND CANADIAN DEVELOP-MENT

Many nations are investigating the potential of geo-thermal energy, both for electrical and non-electricalapplications, but this source is only exploited on a minorscale today (Tables 6-11 and 6-12). The U.S.S.R. makesthe greatest non-electrical use of the Earth's heat whilealmost half of the world's geothermal-electric capacitylies in California. The contribution of geothermalresources to the world energy picture will remain small inthis century, although in certain regions it promises tobecome quite significant.

Table 6-11: INSTALLED GEOTHERMAL-ELECTRIC CAPACITY IN 1980

Unit: Electrical megawatts.

INSTALLEDCAPACITY

United States 1,000Mexico 153Japan 218Italy 455Iceland , 64El Salvador 60New Zealand 203Philippines 58U.S.S.R 5Republic of China 3

WORLD TOTAL 2,219

Source: Stock, 1981.

175

Table 6-12:

COUNTRY

United StatesItalyNew ZealandJapanIcelandU.S.S.RHungaryFrance

NON-ELECTRICAL USE OFTHERMAL ENERGY IN 1979

Unit: Thermal megawatts.

RESIDENTIAL& COMMERCIAL

75505010

68012030020

Republic of China —

Source: Stock, 1981.

IVGRICUL-

GEO-

TURAL INDUSTRIAL

55

103040

5,100370

100

520

1505

50————

The United States looks to a rapid expansion of itsgeothermal-electric capacity in The Geysers field in the1980s, after having encountered difficulties in the pastdecade. As of October 1980, there were 928 electricalmegawatts of installed capacity in this field, embodied in15 generating units and representing an investment ofapproximately $2 billion. The Geysers already suppliesabout one-half of San Francisco's electricity and ulti-mate generating capacity may exceed 4,000 mega-watts. The Geysers represents the lowest cost newgenerating capacity in California today and suppliesabout 2% of the State's electricity. Development ofgeothermal deposits for both electric power productionand for heat is proceeding in many western states andthe 1980s will see rapidly growing use of this energyresource.

Iceland uses geothermal resources for space heat-ing, serving most of the population. Japan makes limiteduse of geothermal energy for electrical power genera-tion, for space heating, at recreational spas, and inagriculture and industry. Oil price increases have ledJapan to pursue an aggressive program of geothermalexploration aimed at establishing a major geothermal-electric capacity by early in the next century.

The largest geothermal development in Latin Ameri-ca is the 150 megawatts of generating capacity at CerroPrieto in Mexico, expected to reach 400 MW in 1982. ElSalvador's 60 MW station accounted for nearly one-thirdof that country's electric generation in 1977. If numerousother Latin American projects now in the feasibilitystage reach fruition, Guatemala, Honduras, Nicaragua,Argentina and Chile will also have geothermal-electricstations operating within ten years.

In New Zealand there is 192 megawatts of commer-cial geothermal-electric capacity installed in the Waira-kei field, with another 150 MW capacity in the nearbyBroadlands field expected to be operational by the

mid-1980s. Declining pressure in the Wairakei field hasforced a drop in generating output to about 145 MW atthe present time and although this reduced rate ofsteam use has tended to stabilize power production, itapparently still exceeds the rate of reservoir recharge.An output of 100 MW is thought to be indefinitelysustainable. Approximately 8% of New Zealand's elec-trical energy is derived from geothermal sources.

France is developing warm-water fields in sedimen-tary basins and some 12,000 dwellings in the ParisBasin are heated geothermally with more in the planningstage. Unlike most geothermai schemes, this develop-ment has taken place in a region of average thermalgradient. France projects that 2% of its housing stockmay be so heated by the turn of the century.

Extensive warm-water fields have heated parts ofBudapest since the 1930s and the Hungarian Govern-ment is developing an extensive geothermal system forthe entire city of Szeged. A longer-term goal is spaceheating of an additional 100,000 to 200.000 units.Warm water is also used in agricultural applications andHungary today exploits more than 1,100 thermal mega-watts of geothermal energy overall.

The Soviet Union is the world's largest user ofgeothermal energy for non-electrical purposes, the prin-cipal application being in agriculture. Geothermal spaceheating has been employed in the U.S.S.R. since 1947.In 1975, 28 geothermal fields were reported to besupplying heat to housing and to farming in severalregions of the Soviet Union.

Interest in Canada's geothermal resources is arecent phenomenon and the role that this energy sourcewill play here is not yet clear. The Earth Physics Branchof the Department of Energy, Mines and Resources isthe lead agency for geothermal research. A GeothermalStudies Group has been in existence since 1962, butonly recently has funding for this group increasedsignificantly.

Research is directed towards defining the areas ofgeothermal potential in Canada, but a comprehensivepublication outlining these resources across the countryis still some time away. The Federal Government'sapproach is to identify the most promising areas andthen to involve the relevant provincial government orutility in the development stage.

Investigation of Canada's geothermal potential ispresently concentrating on two regions: a broad thermalanomaly extending through the southern Yukon andwest-central British Columbia, and the Western CanadaSedimentary Basin. Eastern Canada appears less pro-mising although there is a possibility that deposits ofrelatively low-temperature water may be found in asso-ciation with rocks containing radioactive minerals.

The westernmost part of the country is a segmentof the geologically active spine of North and South

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SOURCES, CURRENCIES AND TECHNOLOGIES

America. While this zone is characterized by earthquakeactivity, current (or geologically recent) volcanism, hotsprings and zones of high heat flow, there is a lack ofthe associated features (mud pots, alteration zones,boiling water) commonly found near producing geother-mal fields. The geothermal potential of this region ofCanada has been described as follows:

...The possibility of finding a dry steam field such asLarderello or The Geysers in Canada seems extremelyremote. Such fields are invariably associated withsurface leakage of steam or boiling water. Even thesmallest surface expression of such thermal activitycould not have gone unnoticed in the Canadian Cor-dillera where, for twenty years, an aggressive mineralexploration industry has used helicopters to scout thelandscape...

It seems realistic to hope for the discovery of atleast one hot water field (such as Wairakei) capable ofsupplying enough flash steam to generate electricity...The most promising areas of search are broadlydefined by the four belts of Quaternary volcanoes thatextend across British Columbia and southwesternYukon... (Souther, 1975. p. 266)

Studies of recent volcanism have led to the choiceof the Meager Mountain area north of Vancouver for theFederal Government's first demonstration of a geother-mal reservoir of volcanic origin. For the past five yearsthe Government has been working on this project incooperation with B.C. Hydro. The investigation first con-centrated on identifying the best site for deep drilling,since the reservoir is not always found directly under thesurface manifestation of the geothermal resource. If thedrilling program establishes a deposit with appropriatecharacteristics, B.C. Hydro will assume commercial de-velopment and may have a pilot geothermal-electricplant operating by the mid-1980s. Federal funding of theMeager Mountain project came to $420,000 in FY 1980-81 and is set at $325,000 in 1981-82.

No other area in the Canadian Cordillera has beenstudied as thoroughly as has Meager Mountain for itsgeothermal potential, but there are further sites of inter-est. Geothermal resources suitable for generating elec-tricity may be discovered in other volcanic belts ofBritish Columbia and the Yukon. The Mt. Edziza area innorthern British Columbia looks especially promising.However, due to its remoteness, lack of a sizeable localmarket for the electricity and the costs involved ininvestigating this resource, it is unlikely that Mt. Edzizawill get a high priority. This geothermal field is in MountEdziza Provincial Park which could lead to conflicts inland use.

The other region of Canada being studied is theWestern Canada Sedimentary Basin underlying most ofAlberta and parts of British Columbia, Saskatchewan,Manitoba, the Yukon and the Northwest Territories. Thefirst attempt to tap the Basin's thermal potential beganwhen the Energy Research Unit of the University ofRegina approached EMR concerning the possibility ofgeothermally heating a new building. The Federal Gov-ernment is assisting in this venture by paying for testwell drilling, in line with its objective of defining areas ofexploitable geothermal potential. The heating systemenvisioned requires two boreholes, one to pump waterto the surface and the other for its return. Results fromthe initial drilling were promising and the work continues.The Federal contribution to the Regina project was$17,700 in 1980-81 and is expected to be $250,000 inFY 1981-82.

To better define Canada's geothermal potential, amodest program of resource appraisal is underway,costing $592,000 in the 1980-81 fiscal year. Thus Fed-eral expenditures in the geothermal sector in FY 1980-81 totalled slightly more than $1 million, includingshared-cost projects.

CONCLUSIONThe Federal Government's approach to geo-thermal exploitation — identifying and definingthe resource while involving appropriate partiesin its commercialization — is sound.

CONCLUSIONGeothermal energy will not add significantly toCanada's energy supply in this century. In thelong run, however, this resource has the poten-tial to contribute in an important way. largely innon-electrical applications, if economic extrac-tion methods are developed.

RECOMMENDATIONThe Committee recommends that Federal ex-penditures on geothermal energy be sufficientlylarge to accomplish at least the following: todefine the size of the geothermal resource inCanada; to promote development of this energyform, especially for space heating; and todetermine the feasibility of extracting thermalenergy from hot, dry rocks.

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Figure 6-19: THE ESSENTIAL COMPONENTSOF A HEAT PUMP

-15fCAit

5tf>c Supply air

20°C Return air

Evaporator-2D°C —* '— Compressi» Condenser

OUraOOBIMT MOORIMT

Source: Leslie. 1977. p. 78.

absorbs heat, its latent heat of vaporization, from thesurrounding air which is in turn cooled somewhat by theprocess. A compressor circulates the gas back to thebuilding where it is condensed and changes state backto a liquid, giving up its latent heat of vaporization andwarming the interior air.

The Latent Heat of VapourizaUon

The latent heat of vapourization is the amountof energy required for a substance to change itsstate from a liquid to a gas. This quantity ofenergy is much greater than that required simplyto raise or lower the temperature of the liquid. Forexample, to raise the temperature of one gram ofwater through one Celsius degree, one calorie ofheat is required. To vapourize a gram of water atthe boiling point, 540 calories are required.

This type of heat pump cycle (termed a vapourcompression cycle) is by far the most common in usetoday. Other cycles involve the compression and expan-sion of air or the chemical absorption of heat and are inlimited use or under development, but neither is com-petitive with the vapour compression cycle at present. Anovel and very promising combination of a simple heatpump using water as the working fluid, with an activesolar heating system using hygroscopic salts for heatstorage, is discussed in the section on Solar Energy.

Virtually all heat pumps used today are powered byelectric compressors. Alternatively, a heat engine, run-ning on natura! gas or oil, for example, can be employedto power the compressor for a heat pump, in which casethe waste heat from combustion can be used to helpwarm the building.

2. ADVANTAGES AND DIFFICULTIES IN USINGHEAT PUMPS

Heat pump efficiency is expressed by the coeffi-cient of performance (COP) — the ratio of the energydelivered at the high-temperature unit to the energysupplied to the compressor. If the heat pump is beingused to heat a home and the outside temperature isabout 0°C, a COP of between 2 and 4 is common. Thismeans that for every unit of electrical energy delivered tothe compressor, between 2 and 4 units of heat energyare made available inside the home. High COPs arefeasible with large machines pumping through smalltemperature differences. Such efficiencies demonstratethe major advantage in pursuing heat pump technology.

The efficiency of a heat pump declines with lowerexterior temperatures, however. At a "balance point" ofabout 0°C (exterior) a heat pump is just equal to meet-ing the heating needs of the building it serves, and belowthat temperature heat delivered by the pump must besupplemented by some other source. It is clear then thatin northern latitudes the extreme cold of winter makesthe application of air-source heat pumps of limitedvalue. Figure 6-20 shows one estimate of the approxi-mate practical northern limit of conventional air-sourceheat pump use in Canada. Undoubtedly future advancesin technology will push the "northern limit" line furthernorth, and the illustrated limit does not apply to ground-and water-source heat pumps or to unconventionalapplications. Nevertheless, almost one-third of Canada's

Figure 6-20: NORTHERN LIMIT OF AIR-SOURCEHEAT PUMP APPLICATION INCANADA

Source: Sandori, 1978, p. 51 .

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SOURCES. CURRENCIES AND TECHNOLOGIES

population lives in the "preferred zone", indicating thateven at present the technology should be of greatinterest to Canadians.

Heat pumps are being used increasingly for industri-al processes such as wood-drying, and the Committeeanticipates that this technology will be applied morewidely. The application of heat pumps is particularlyadvantageous where temperature differentials must bemaintained within buildings. For example, heat pumpscan be used to freeze the ice in skating arenas, deliver-ing the extracted heat to warm the surrounding stands.Similarly, heat pumps may be used in community cen-tres to warm the water of indoor swimming pools,extracting heat from the air in the building or from anadjacent skating rink. Such energy balancing probablyrepresents one of the best short-term applications ofheat pump technology.

RECOMMENDATIONThe Committee recommends that heat pumpuse in suitable community recreation com-plexes be encouraged and that all three levelsof government investigate the potential forfinancial assistance in this regard.

While heat pumps are attractive because of theirenergy conserving characteristics, their capital andmaintenance costs are presently greater than those ofother systems. Moreover, since alternative fuel costs andavailabilities vary across Canada, it is necessary toevaluate the economics of heat pump systems from siteto site. For example, a study by Cane (1980) suggestedthat gas furnaces are more economical than heat pumpsfor new installation and retrofit in locations where naturalgas is available. Similarly, economic analyses done byother workers (Kernan and Brady, 1977; Heap, 1979;Strieker, 1980) confirm that generalizations on theapplicability of heat pumps are difficul: to make. Wherethe homeowner attaches a high value to air conditioning,however, the analyses suggest that heat pump systemsare economic in all major Canadian cities.

3. INTERNATIONAL AND CANADIAN DEVELOP-MENT

Progress in heat pump research and development ismonitored by international organizations concerned withenergy supplies, including the World Energy Conference,the International Energy Agency (IEA) and the Scientificand Technical Research Committee of the EuropeanEconomic Community. The International Council forBuilding Research Studies and Documentation publishesreviews of current research in heat pump technologyapplied to buildings, and the International Institute ofRefrigeration includes work on a wide range of heatpump applications in its publications.

In the United Kingdom only about 500 heat pumpsare installed at present, chiefly because of the lack ofsuitable equipment. The Electricity Council is monitoringair-source heat pumps in commercial buildings and isdeveloping high-temperature heat pumps for industrialuse. A number of organizations are investigating gas-fired units.

Residential heat pumps were introduced to Francein 1970 but their mass production has not yet begunand the spread of the technology has been slow as aconsequence. By the beginning of 1977, 3,100 units hadbeen installed, of which 2,800 were in collective dwell-ings. A further 150 heat pumps were in service in officebuildings. 350 in stores and 200 in small businesses. Animportant industrial application of heat pumps in Franceis wood-drying with over 1,000 installations in operation.The wood to be dried is placed in a chamber which isdehumidified using the cold coils of a heat pump and airwhich is warmed on the hot coils is returned to the dryer.

Heat pumps are the subject of active research anddevelopment in Australia, Austria. Belgium, Denmark,Eire, Finland, Italy, Japan, the Netherlands, New Zea-land, Norway, Sweden, Switzerland and West Germany.Industrial applications are widespread in Europe andinclude drying bricks, ceramics and noodles, evaporat-ing milk and other foods, and concentrating sugar solu-tions and alcoholic beverages. A special application,used only in Europe to date, is in electroplating whereseparate hot and cold baths are required for the varioussteps of cleaning, acid treatment, preparation, platingand washing. Heat pumps provide an ideal means ofmaintaining the necessary temperature differences.

In the United States the first large-scale heat pumpapplication was in the Los Angeles offices of SouthernCalifornia Edison Company in 1930-31 and by 1940there were 15 commercial installations around the coun-try. The first experiments with ground-source heatpumps were made around 1950 and in the early 1960sdomestic heat pumps gained an appreciable market inthe United States. Unfortunately they went out of favourbecause of poor reliability. For the same reason, theU.S. Armed Forces banned the use of heat pumps inmilitary housing in 1964, a ban which remained in effectuntil 1975. As reliability was improved, sales picked upagain in the early 1970s with reversible units gainingfavour among consumers. The Department of Energy isdeveloping a new natural gas-powered heat pump whichcould be on the market in the early 1980s. This kind ofunit promises to exceed by about 50% the total heatenergy delivered by a conventional heat pump for thesame energy input.

The international market for heat pumps is expand-ing. For instance, the total U.S. supply of packagedunits for space heating and cooling was expected to be

181

600,000 in 1980. 1979 Canadian demand reached5,000 units and in Germany an estimated 15.000 to18,000 units were purchased in 1980 (Strieker, 1980).The relative sizes of these markets reflect the differingstates of technological innovation as well as the market-specific needs in each area. North American applica-tions are primarily residential and commercial, whereasthe Europeans are more advanced in industrialapplications.

Heat pumps are used at several Canadian kilns fordrying hardwoods (softwoods are dried at much highertemperatures and suitable heat pumps are not yet avail-able). R&O in Canada is not extensive, but OntarioHydro is carrying out research aimed at lowering the bal-ance point of heat pumps so as to make this technologyuseful at colder temperatures and in more northern lati-tudes. Much of this program is being sponsored by the

Canadian Electrical Association which will be invitingproposals from Canadian manufacturers to produce theOntario Hydro-designed pump.

CONCLUSIONThe increasing use of heat pumps in Canada iscompatible with the goals of substituting for oiland conserving energy. The decision to applyheat pump technology, however, is highlycase-specific.

RECOMMENDATIONGovernmental and industrial RftD in Canadashould continue to refine heat pump technolo-gy. Emphasis should be placed upon penetrat-ing commercial, residential and industrial mar-kets and upon seeking the most effectivemarrying of heat pumps with other energytechnologies.

182

2. PRODUCING HYDROGEN

As the world's supplies of fossil fuels decline, therewill necessarily be a shift towards sustainable energysources. These sources can be harnessed to produceelectricity via photovoltaic cells, wind conversion sys-tems, tidal power plants or geothermal-electric generat-ing facilities. Add to this Canada's abundance of sitesfor small and large hydro-electric developments, plentifulsupply of uranium and mature nuclear technology andone can foresee a future in which electricity plays anincreasingly important role. Some of the energy needscurrently met by hydrocarbons can be satisfied by elec-tricity; however, electrical energy is neither as easilystored nor as efficiently transported over long distancesas are fossil fuels. By using electricity and the process ofelectrolysis to produce hydrogen, these difficulties canbe largely overcome. Thus H2 can facilitate a shift from afossil fuel-based energy system to one based on electri-cal energy.

Electrolysis

Electrolysis is a process in which a directelectrical current is passed through a solution ofwater and a catalyst causing the water to decom-pose into its elemental components, hydrogenand oxygen. This reaction can be represented asfollows:

H2O(liquid) + energy input -«• H2(gas) + 'AO^gas).

The efficiency of the electrolysis process can beexpressed as the ratio of

heating value of H? output.electrical energy input

Commercial electrolysis plants are in use today,primarily to generate hydrogen for ammonia production.In British Columbia, Cominco Limited operates one ofthe largest commercial electrolyzer plants in the world.This plant consumes 90 megawatts of power and pro-duces about 36 tons of hydrogen per day for synthesisinto ammonia. The range of efficiency in the electrolysisprocess in such plants is typically 57% to 72%.

It may be possible to reach efficiencies of 85% or,if operated in an endothermic (heat absorbing) modeusing heat from the surroundings, efficiencies in excessof 100% may be achieved in the electrolysis cycle. Thisshould not be confused, however, with the efficiency ofthe entire process which includes that part of the cyclein which the electricity itself is produced, it is this factorwhich limits the overall efficiency and raises the cost ofproducing hydrogen by electrolysis. Improving efficiencyin the production and use of electricity from whateversource is clearly a fruitful area for research. An improve-

ment in this area would enhance the opportunities forincreased use of hydrogen fuel in our economy.

Today, the electrolytic process generates less than1 % of Canada's hydrogen supply. Hydrogen is pro-duced primarily by steam reformation or partial oxida-tion of hydrocarbons. The process involves heating amixture of water and natural gas or crude oil to releaseH2 and is known as the "water-gas reaction". Currently,76% of Canada's hydrogen comes from natural gas andis used principally in the synthesis of ammonia for fertil-izers. Twenty-three per cent of our hydrogen is pro-duced from liquid petroleum and is both generated andused internally by the petroleum industry in the refiningprocess. In the future, the output of hydrogen from thesemethods of production is unlikely to increase as thedomestic supply of both oil and natural gas declines.

There are several additional methods of producinghydrogen which are the subject of research in othercountries. For example, it is possible to split water intohydrogen and oxygen by the direct application of heat.This thermal decomposition can only be achieved attemperatures of 2,500°C to 4,000°C. Such high temper-atures will be available in the future if fusion reactors aredeveloped but the direct thermal decomposition ofwater on a commercial scale is, in practice, impossibletoday.

Although the direct thermal decomposition of watermay not be feasible, it is possible to achieve this endthrough a series of chemical reactions. A reactionsequence can be devised in which hydrogen and oxygenare produced, at lower temperatures than those requiredfor direct thermal decomposition, by applying heat tospecific chemicals. Only water is consumed and all otherchemical products are recycled. Thermochemical cycleshave been under investigation in many parts of the worldfor a number of years and a bench scale system involv-ing a sulphur cycle has been demonstrated in Europe.

Canada, the United States, the European EconomicCommunity and seven other countries have joined to-gether, under the auspices of the International EnergyAgency, to share in research on thermochemical hydro-gen production. Canada's main effort, however, shouldremain with the electrolytic production of hydrogen,given our abundant supply of electric power.

There are still other methods of producing hydrogenwhich show a great deal of promise. Most current andproposed methods of utilizing solar energy are based onthe conversion of sunlight to heat, to be used directly forspace or water heating, or to electricity via silicon solarcells. However, additional steps are necessary if energystorage is required. The photochemical conversion ofsolar energy is an attractive option because it offers thepotential of directly converting and storing solar energyas a chemical fuel (hydrogen).

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SOURCES. CURRENCIES AND TECHNOLOGIES

Thermochemlcal Hydrogen Production

In Europe, the Joint Research Centre of theCommunities (JRC) began investigating thermo-chemical hydrogen production in 1970. The mostsuitable cycles are being identified and scientistsare assessing their chemistry, environmentalimpact and production costs. By a process ofelimination, the choice in Europe has been nar-rowed to three sulphur cycles. Of these three, thetwo most promising cycles are hybrids; that is,they each include an electrochemical stage (otherstages are thermochemical). One of these cycles"Mark 13" (detailed below) has been operated atthe laboratory stage, producing hydrogen at arate of 100 litres an hour. (The arrows pointing inopposite directions indicate that the reactions arereversible.) It is believed that this is the world'sfirst demonstration of a complete thermochemicalwater-splitting cycle. The process takes place attemperatures in the range of 500" to 650°C.

1) SO2 + Brz + 2 H 2 O ^ 2HBr +

2) 2HBr^* H2 + Br2 (the electrochemical step)

4 ̂ H20 + SO2 +This development puts the reaction within the

bounds of the operational temperature of conven-tional nuclear reactors, operating in the range of540°C to 700°C. Solar power towers are alsoexpected to deliver high temperatures which couldbe used in a thermochemical reaction. All otherthermochemical cycles investigated have requiredoperating temperatures beyond this level.

tered during development. Dr. Calvin has stated that hedoesn't see any fundamental scientific difficulties withhis approach.

The most promising photochemical reaction is theproduction of hydrogen and oxygen by the visible-lightphotolysis (splitting) of water. This can be done by livingorganisms or in biomimetic systems (systems which,although inspired by the mechanisms of natural photo-synthesis, are entirely artificial). Some of these methodsretain a part of the living photosynthetic system (forexample isolated chloroplasts), others use solutions ofappropriate chemicals and still others constitute whatare termed photoelectrochemical cells. The firstapproach seems least promising because chloroplastshave a very short life span outside a living cell.

One of a number of approaches being taken inter-nationally is that of Dr. Melvin Calvin who won the Nobelprize in 1961 for his mapping of the photosynthesis ofcarbohydrates. He has developed an artificial chloro-plast which is less complex than a natural one but whichfunctions in much the same way (Figure 6-21). Althoughthe system is far from being perfected and there willundoubtedly be difficult mechanical problems encoun-

Photochemical Hydrogen Production in Solu-tion

As in electrolysis, water is the raw material forphotochemical hydrogen production. In the pres-ence of sunlight, atoms of a catalyst such asrhodium are excited causing them to releasenegatively-charged electrons which react withpositively-charged hydrogen ions in solution toproduce hydrogen gas. In theory, as much as20% of the energy in sunlight could be convertedinto hydrogen by this process. Since rhodium(which is a rare earth element) is both scarce andexpensive, some research is aimed at finding alter-nate catalysts, tungsten and molybdenum beingtwo possibilities.

Much more research must be done to establishwhether or not a workable photochemical fuel-genera-tion system with its inherent advantages can be devel-oped. This question will probably be answered within thenext decade.

3. STORING HYDROGEN

Hydrogen, like natural gas, can be liquefied andstored at very cold temperatures (cryogenic storage).Liquid hydrogen is stored in vacuum-insulated flasks atabout -250°C but this is not likely to be the favouredstorage option when hydrogen comes into wider use.The cost of the insulated containers is one concern, butthe most important limiting factor is the energy requiredto liquefy hydrogen in the first place — 25 to 30% of itsheating value.

A more conventional method for storing small quan-tities of hydrogen is as a gas in high-pressure cylinders.This method of storage is both expensive and bulkysince a large quantity of low-carbon steel is needed tocontain a relatively small amount of hydrogen. The han-dling of hydrogen presents some technical difficultieswhich have to be taken into account. Embrittlement ofmetal can be a problem in all hydrogen systems, butespecially at very high pressures. Hydrogen moleculesare the smallest of all molecules and can diffuse intospaces between atoms in metals. This makes the metalbrittle and can result in surface cracking which weakensthe pipe or storage vessel. Furthermore, its smallmolecular size allows hydrogen gas to leak more easilythan other gases from systems under pressure.Nonetheless, these technical difficulties can be over-come by careful design.

185

Figure 6-21: A BIOMIMETIC METHOD OF PRODUCING HYDROGEN

A photon of light hits a* l synthetic chlorophyll

An electron in that moleculeis excited.

WATER MOLECULE ( H

SYNTHETIC CHLOROPHYLL HYDROGEN IONMOLECULE (AT0M WITHOUT ELECTRONSELECTRON HYDROGEN GAS(H

UNSTABLE OXYGENATOM

9 " ~ 1 6 The hydrogen is held in thecnloropfast by a catalyst, whilethe first eight steps are repeated-drawing the second hydrogen ioninto !he ehloroplast

That electron olumps to the Qhydrogen ion.forming H.

Hydrogen escapes as agas to be used as fuel.Oxygen is released faruse by ihe chemicalndusiry.

UNSTABLE OXYGEN ATOM

That molecule drawsan electron tromwater. The resulting

hydrogen ton movesC across me chloro-

6A second photon of lighthiis the second syntheticchlorophyll molecule.

The electron jumpsacross the chloroptastto another molecule.

now lacks an electron.

PHOTON

Source: After Weintraub. 1981, p. 37.

Since storage as a liquid or as a compressed gas isonly suitable for comparatively small quantities of hydro-gen, under-round storage may represent the bestapproach foi inexpensively containing large quantities ofthe gas. This seems technically feasible as natural gashas for many years been injected into depleted oil or gasreservoirs and stored until required. Any such reservoirwould have to be judged on its individual characteristics.Aquifers can be used in a similar manner by displacingwater with injected hydrogen. In England, ImperialChemical Industries Limited is storing 95% pure hydro-gen in solution-mined caverns in a salt deposit.

The main disadvantage of underground storage isthat it is limited to locations with suitable geology. This isnot a serious problem, however, since H2 can be trans-ported by economical means to the point of use.

Cryogenic storage and pressurized storage areappropriate for the present industrial uses of hydrogen,and underground facilities allow safe storage of largequantities of H2. But neither of these methods is suitable

for use in moving vehicles or where a combination ofcompactness and large hydrogen-holding capacity isrequired. There are alternative storage methods whichshow considerable promise for application in these spe-cial situations. ^

Most metals will, on contacting gaseous hydrogen,form a compound known as a metal hydride. Metalhydrides are attractive because they can bind a largequantity of hydrogen. For instance, it is possible to getmore hydrogen into a given volume in the form of ametal hydride than into the same volume as a liquid. Themetal is normally prepared in the form of small particlesto provide as much surface area as possible with whichthe hydrogen can react. As one might expect though,there is a difficulty with this approach too and the majorconcern here is the weight of the system.

The most promising hydride examined to date is aternary hydride (that is, two metals plus hydrogen), thetwo metals being iron and titanium. This system has arelatively low cost, a low dissociation pressure and a

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SOURCES, CURRENCIES AND TECHNOLOGIES

Hydrogen Storage in Metal Hydrides

The reaction of a metal with hydrogen can beexpressed as follows:

M (metal) + H 2 i ? MH2 (metal hydride).

This is a reversible reaction. If the ambientpressure is above a certain level (equilibrium pres-sure), the reaction proceeds to the right producinga hydride. Below this equilibrium pressure, thehydride will dissociate into hydrogen gas and themetal.

moderate controlling temperature. Its disadvantages areits weight and its sensitivity to contaminants (ultrapurehydrogen must be used). An iron-titanium hydride isalready being used in several prototype vehicles in theUnited States and in Germany.

The high storage density and the inherent safety ofhydride systems (they release hydrogen only slowlyupon rupture) have made them an attractive subject forresearch. In instances where mobility, compactness andweight are not factors, such as in the on-site storage ofhydrogen from off-peak power, metal hydride storagecompares favourably with other methods. It seems likelythat such storage will gain in importance as hydrogenfuel becomes more widely used.

In applications where mobility and weight areimportant, such as in automobiles, liquid hydride storagemay hold the answer. A liquid hydride is any liquidcompound which contains hydrogen as a major element.Water (H2O) is of course the most abundant liquidhydride, but gasoline, propane and methanol are exam-ples of liquid hydrides as well. In addition to thesenatural hydrogen carriers it is possible to create a varietyof synthetic liquid hydrides. Such compounds couldprovide an answer to the problems of storing and carry-ing H2 in a form suitable for use in mobile applications.Methanol from biomass, for example, could well becomean important hydrogen carrier in this country as weincrease our production of this alcohol.

4. TRANSPORTING HYDPuSEN

Most commonly hydrogen is transported over longdistances in the form of a liquid. This is done in double-walled, evacuated, insulated containers mounted ontrailer trucks, rail cars or barges. Small quantities ofhydrogen are moved as compressed gas in thick steelcylinders. Both of these methods will continue to beused in the future for small volumes but, in a "hydrogeneconomy", H2 will most likely move to market viapipeline.

There is already a considerable amount of experi-ence in the transmission of hydrogen by pipeline. In theUnited States, the National Aeronautics and Space

Administration and the private company involved in theliquid-hydrogen rocket engine program have successful-ly operated very short high-pressure pipelines for bothliquid and gaseous hydrogen. These high pressures andthe use of liquid hydrogen pipelines are unlikely to beimplemented for the large-scale movement of hydrogenfuel, but this experience has shown what can beachieved.

Of greater interest are the commercial or "mer-chant" hydrogen pipelines operating in several coun-tries, which demonstrate the feasibility of pipeline trans-mission of hydrogen gas. In the United States, AirProducts and Chemicals Incorporated of Houston,Texas operates a 96-kilometre (60-mile) undergroundpipeline. This system has worked so weil that plans areunderway to construct a further 104 kilometres (65miles) of pipeline to serve additional customers in thearea.

Perhaps the most impressive hydrogen pipelinesystem is that belonging to the Chemische Werke HulsAG in the Ruhr Valley of West Germany. Tt»!s 210km-long underground pipeline network handles 95%pure hydrogen at a pressure of 1.5 megapascals (210pounds per square inch). There are four separate injec-tion points and nine different users. No significant prob-lems have been encountered during the 40 years thatthis pipeline has been in operation.

The cost of hydrogen compared with currentpetroleum prices precludes its use as a fuel today. Thismeans no large-scale hydrogen pipeline is likely to bebuilt soon. On the other hand, present natural gaspipelines and, more importantly, natural gas end usesare compatible with adding up to 20% H2 to the gas.Thus in the long term, as natural gas becomes lessabundant and the supply of hydrogen gas increases,pipelines could be modified to carry H2. The majoralteration required would be the installation of largercompressors. The heating value of H2 is only one-thirdthat of natural gas for an equal volume. Larger compres-sors are therefore required to move three times thevolume of hydrogen in order to maintain the same rateof energy delivery (if the system is converted to carryingH2 alone).

5. A HYDROGEN-BASED ENERGY SYSTEM FORCANADA

Switching Canada's energy system from one basedprimarily on nonrenewable hydrocarbons to one basedon a wide variety of sustainable energy sources withhydrogen as the major currency will be neither quick norinexpensive, but it is nonetheless desirable.

CONCLUSION

The Committee believes that Canada shoulddevelop a hydrogen-based energy system.

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RECOMMENDATIONThe Committee recommends that an energysystem based upon hydrogen and electricity asthe principal energy currencies be adopted bythe Government of Canada as a long-termpolicy objective.

There are numerous reasons for concluding that ahydrogen-based energy system makes sense forCanada. The large reserves of bitumen and heavy oil inAlberta and Saskatchewan will necessarily form part ofour energy supply for many years to come. Thesereserves require the addition of hydrogen for upgradingto usable oils. Today hydrogen used for this purposecomes from natural gas and conventional crude oil, butin the future the hydrogen could be produced by elec-trolysis. The first step towards a hydrogen-based energysystem might therefore be made in extending Canada'ssupplies of hydrocarbon fuels. Although this appears tobe an expensive approach, it would allow hydrogenproduction capability to parallel rather than track thedevelopment of end uses for hydrogen in our economy.A further benefit of this approach could be a smoothtransition out of the petroleum era.

In the Biomass section the Committee recommendsconstruction of a methanol plant using biomass andnatural gas as feedstocks. The natural gas is added tothe synthesis gas produced from biomass to increasethe hydrogen to carbon ratio and thereby raise methanolyields. Electrolytic hydrogen could eventually replacenatural gas as the hydrogen source in this type offacility.

In still another application, electrolytic hydrogencould be produced using off-peak electricity, increasingthe efficiency and reducing the cost of utility operation.The hydrogen so produced could subsequently feed afuel cell to produce electricity for peaking requirements,much as pumped storage is utilized today. However thisconversion from electricity to hydrogen and back toelectricity is only about 35% efficient and the energylost in first producing the electricity has also to beaccounted for. Thus it would make more sense to mixthe hydrogen with natural gas and deliver it by pipelineto consumers or to ship it directly to industrial users.

Canada has potential sites for large hydro-electricgenerating stations which have not been developed dueto their distance from markets. If electricity produced inthese remote areas were used to electrolyze water intohydrogen and oxygen, these two gases could be pipedto distant consumption points. It was estimated bywitnesses before the Committee that for distances over500 km it would be cheaper to go this "hydrogen route"than to transmit the power by high-voltage transmissionlines, provided that the hydrogen were not to be recon-verted 'io electricity. If nuclear energy were to be used,

the remote siting of nuclear power stations, with ahydrogen pipeline link to markets, could help allaypublic concern over the location of such stations nearpopulation centres.

Hydrogen produced by electrolysis has distinctadvantages over liquid fuel options because it can beproduced from most energy sources through themedium of electricity. Therefore, Canada could beginnow to develop the infrastructure for a hydrogen-basedenergy system knowing that no matter which long-termenergy option ultimately proves to be our major sourceof supply, the hydrogen infrastructure would remain thesame.

CONCLUSIONThe Committee believes that hydrogen is thebest fuel for a non-carbon-based energysystem.

RECOMMENDATIONThe Committee believes that hydrogen will bean important element of Canada's future energysystem and recommends that we begin now todevelop the technology and infrastructure forhydrogen production, distribution and use.

The speeo with which a hydrogen energy system isintroduced will probably depend more upon political andenvironmental concerns than upon economics or thedepletion of hydrocarbon resources. Canada, neverthe-less, is in a unique position to become a v/orld leader inelectrolytic hydrogen production technology. We alreadyhave an abundant supply of electricity from non-fossilfuel sources and we have the potential for producingelectricity from a number of renewable sources. We arealso fortunate in that the world's leading manufacturer ofelectrolysis equipment is a Canadian company. It thusappears that with this lead Canada should be in aposition to develop a complete hydrogen system. Themissing element is end uses for the increased hydrogenproduction. Suggestions have been made to the Com-mittee that the development of a low-cost fuel cell foruse in ground transportation would complete thesystem. In addition to helping replace oil in the transpor-tation sector, this system would provide excellent oppor-tunity for the export of technology to other countries.

RECOMMENDATIONThe Committee agrees that the early demon-stration of a hydrogen-based urban transporta-tion system is required in Canada and recom-mends that research into this use of hydrogenbe supported with the aim of rapid commerciali-zation.

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SOURCES, CURRENCIES AND TECHNOLOGIES

While we already know a certain amount about theproduction, storage, transportation and use of hydro-gen, much research remains to be done before hydro-gen plays a major role in our energy system. Many othercountries have acknowledged the potential benefits of ahydrogen-based energy system and are working to over-come the remaining problems surrounding its economicproduction and use.

CONCLUSIONCanada has a momentary advantage, possess-ing all of the essential elements for developingan electrolytic hydrogen system. What is miss-ing is a commitment to taking full advantage ofour position.

This is made clear by the fact that the current Fed-eral RD& D program for hydrogen is funded to the levelof only $1 million per year - a sum which must cover allRD & D on the production, storage and use of hydrogen.

CONCLUSIONFederal funding of hydrogen RD&D is totallyinadequate to allow Canada to gain, or maintainfor long, a position of world leadership in anyarea of hydrogen technology.

Having decided that a hydrogen-based energysystem should be implemented in Canada, the Commit-tee sought the opinion of experts in the field of hydrogenenergy as to what steps would be necessary to achievethis long-term objective. The response indicates thatsuch a system will only evolve in this country if there is astrong politica; will to make it happen. Without a firmcommitment on the part of the Federal Government, itwill be many years before hydrogen makes a significantcontribution to our energy system. Once a commitmentto such a course of action was made, the rate ofdevelopment would depend to a great extent upon theamount of money dedicated to the effort. In order toattract and keep top research scientists well versed inthe fields of hydrogen production, storage, transporta-tion and use, a major, long-term financial commitment isa necessity.

If Canada decides to pursue a purely RD & D pro-gram over the next five years, with no provision for com-mercialization, funding in the tens of millions of dollarswould be required. This would ensure that steady, ifslow, progress was made in hydrogen RD&D but itwould not enable us to begin developing a hydrogen-based energy system. If, on the other hand, Canadachooses to pursue the rapid development and commer-cialization of a complete hydrogen-based energy sys-

tem, the investment required would be in the order ofhundreds of millions of dollars over the next five years.

CONCLUSIONThe Committee believes that Canada has aunique opportunity to become the world leaderin hydrogen technologies if we follow an ambi-tious route to the early establishment of ahydrogen-based system.

It is important to note that the Committee is notsimply recommending the introduction of another supplyoption — we are talking about the development of anentire energy system. Technologies for the production,storage and transportation of H2 must be refined andcosts reduced; the infrastructure necessary for the wide-spread distribution and use of H2 needs to be put inplace; and end-use technologies require basic RD&D.The Committee believes that Canada has an opportunityto act decisively and quickly to establish this country asa world leader in hydrogen energy technologies. Canadacurrently spends billions of dollars on large energysupply projects. The next tar sands plant is expected tocost about $10 billion and the Darlington nuclear gene-rating station will probably exceed $7 billion in construc-tion costs. Each of these large projects offers only oneenergy commodity — one supply option. A hydrogen-based system can involve a wide variety of energysources and an equally wide variety of non-polluting enduses. Certainly such a system is worth funding at thesame order of magnitude as conventional energy supplyprojects.

RECOMMENDATIONThe Committee recommends that the FederalGovernment be prepared to spend up to $1billion over the next five years to foster thebroad development of a hydrogen-baaedenergy system and to establish Canada as aworld leader in hydrogen technology.

The task of developing appropriate hydrogenenergy technologies will be an enormous one. The Com-mittee believes that such development will require theguidance of a mission-oriented agency — an agencycharged with orchestrating the research, development,demonstration and commercialization of hydrogenenergy systems. No such agency is currently in place.

RECOMMENDATIONThe Committee recommends that a Commis-sion, to be known as Hydrogen Canada, be

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established to act as the lead agency for hydro-gen RDAD and commercialization In Canada.This Commission should report to the proposedMinister of State for Alternative Energy andConservation.

RECOMMENDATIONThe Committee recommends that the proposedMinister of State for Alternative Energy andConservation begin a review of the progressand accomplishments of Hydrogen Canadaafter eighteen months, with the review to becompleted within six months. A further reviewshould be conducted after the fourth year of theprogram, with subsequent reviews to follow atfive-year intervals.

RECOMMENDATIONThe Committee recommends that the results ofthe periodic reviews of Hydrogen Canada'sprogress be tabled in Parliament within threemonths of their completion and that, in theevent that Parliament Is not sitting at the time,the Minister be permitted to make them public.

Hydrogen Canada: The First Five Years

In the course of its deliberations the Commit-tee sought advice from experts in the field ofhydrogen energy RD&D in Canada. Having decid-ed that an ambitious program, including demon-stration and commercialization as well as researchand development, was right for Canada, the Com-mittee asked Dr. David Scott, Head of MechanicalEngineering at the University of Toronto to sug-gest, as a guide, the funding levels that he feltwould be required to move Canada quickly into aclear position of world leadership in hydrogen-based energy technologies. The following five-yearbudget was submitted to the Committee by Or.Scott and reviewed by Dr. J.B. Taylor of theNational Research Council of Canada. Dr. Taylorconcurred in Dr. Scott's assessment of the effortrequired to reach the stated objective.

Years 1 to 3 would be taken up primarily inestablishing a lead agency for Canadian hydrogenenergy RD&D and commercialization. Someresearch could be contracted out during the timethat Hydrogen Canada's facilities were beingplanned and constructed. In subsequent years,when RD& D was fully underway, higher levels offunding would be required.

Year i Millions of Dollars

Organizational Planning andManagement 2

RD & D Planning 2-4Physical Plant Planning 2Possible Land Acquisition _2j4Total 8-12

Year 2

Facility Engineering and Design .... 7H2 System and Synergy Analysis.. 1Land Acquisition (and some

RD & D initiatives) 40-60Total 48-68

Year 3

Physical Plant (to complete byyear end) 30-60

H2 System and Synergy Analysis,. Demonstration of some retrofit,

small user and generation tech-nologies and establishment ofHz superior RD & D plans 120-170

Total 150-230

Year 4 YearS

H2 System and Synergy Analysis.... 10 15Hz Generation 60 60Hz Distribution 30 40Fossil Resource/Reserve Exten-

sion 30 25Biomass Resource/Reserve

Extension 20 30Small User H2 Technologies 30 30Retrofit H2 Technologies 40 40"Clean H2" Fuel Cell Technology.... 30 60Hybrid Drives (regeneration and

storage batteries) 15 25On-board Hz Storage 10 55LH2 Aircraft Technology 10 13Other H2 Superior Technologies 20 30

Total 305 423

This schedule of funding is an indication ofthe financial requirement to put Canada into thelead in developing hydrogen technologies. It isprovided as a guide to policymakers. As with anyprogram of this magnitude a periodic review of theprogress and direction of research and develop-ment will be required.

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NOHCONVENTIONNAL PROPULSION

MHSlfldOHd 1VN0UN3AN03N0N

A number of steps will be required in making agradual transition to new fuels.

• Conservation of conventional fuels should be promot-ed by reducing non-essential travel and by keepingengines well-tuned and efficiently running.

• A wide range of new, fuel-efficient vehicles should bemade available to consumers.

• The refining specifications of existing refineries shouldbe altered to allow more gasoline and diesel fuel to beextracted from each barrel of crude.

• The use of those hydrocarbons which are presentlybeing under-utilized for transportation purposes, suchas propane and compressed natural gas, should beencouraged and gasoline supplies should be extendedby mixing them with power alcohols.

• Canadians should be weaned from hydrocarbon-con-taining fuels altogether as soon as vehicles which canrun on methanol, hydrogen or electricity becomeavailable and their fuels can be produced in quantity.

Options for nonconventional propulsion are discussedindividually in the following sections.

1 . PROPANE

Propane is a hydrocarbon fuel but it can neverthe-less play an important role in the transition taking usfrom a gasoline-powered transportation sector to onepowered by hydrogen and electricity. Propane is ashort-chain (C3H8), gaseous hydrocarbon whichbecomes a liquid under relatively low pressure. It can bestripped from wet natural gas or it can be producedfrom oil in petroleum refineries. (Wet or raw gas isnatural gas containing liquid hydrocarbons. Propane isone of the "natural gas liquids" recovered in processingwet gas.) These two sources produce about 130,000barrels/day of propane and of this amount approxi-mately one-half is exported. Since propane productionexceeds domestic demand, the discontinuation ofexports would leave a significant quantity of this alterna-tive energy currency in Canada to be used as a trans-portation fuel.

Propane can substitute for gasoline in conventionalengines if modifications are made to the carburetor andfuel system and if a propane storage tank is added.These changes cost from $1,200 to $1,500 and produceseveral advantages in addition to substituting for gaso-line: the combustion efficiency of the engine rises, there-by lowering the energy demand of the engine by asmuch as 10%; there may be lower maintenance costsfor propane-fueled engines; and engine life may beextended by two to three times.

In the Committee's view though there are factorswhich will ultimately limit the number of propane-

powered vehicles in Canada. First, the propane resourceis limited. We can make more available in Canada bylimiting exports and increasing the amount of propaneproduced by refineries, but the amount we can expectto produce from increasingly "dry" gas fields and ourpetroleum resources is finite. Second, being a fossil fuel,propane is a nonrenewable source of energy, and itdoesn't make sense to substitute one diminishingresource for another, except as a short-term measure toaid in the transition to sustainable energy sources. Third,the distribution system for propane is not well devel-oped, a factor which should restrict the use of propaneto fleets of vehicles which are used regularly and fueledat a central source.

CONCLUSIONPropane-powered vehicles can help Canadaconsume less oil and aid in the transition periodduring which more exotic forms of propulsionare developed and hydrocarbons are phasedout as transportation fuels.

RECOMMENDATION

Propane use should be encouraged in the shortand medium terms for vehicle fleets refueled atcentral locations.

2. COMPRESSED NATURAL GAS

Natural gas is composed predominantly of thegaseous hydrocarbon methane (CH4). Unlike propane, itis an abundant resource which could power much of thetransportation sector for a number of years to comeshould the decision be made to encourage its use. It isan efficient, clean-burning fuel which can be used inconventional engines if they are suitably modified — achange which costs around $1,500, or slightly morethan the cost of conversion to propane use.

Natural gas can be used either as a compressedgas (compressed natural gas, or CNG) or as a liquid(liquefied natural gas, or LNG). There are, however,handling and safety problems associated with LNGwhich preclude its gaining widespread acceptance as analternative transportation fuel. Thus, if expanded use isto be made of natural gas for motor fuel, it should bedone by exploiting CNG.

There are limiting factors which may restrict the useof CNG-powered vehicles, however. The cars will requirelarge, heavy fuel tanks because of the low energy densi-ty (low amount of energy per unit volume of gas) of theCNG fuel and will have only limited range. In addition,compressor stations will be required at fuel distributioncentres to fill the storage tanks.

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SOURCES, CURRENCIES AND TECHNOLOGIES

In principle, using natural gas directly as an alterna-tive transportation fuel makes better energy sense thanconverting it to methanol or synthetic gasoline becausethe steps required to "upgrade" it necessarily consumea portion of the energy contained in the raw resource.However, it may not make better economic sense whenother parameters are taken into consideration. Therewould be significant costs involved in converting largenumbers of conventional vehicles to CNG use and ininstalling a distribution network for compressed naturalgas. For these reasons, some have suggested that syn-thetic gasoline made from natural gas would makebetter economic sense as a transportation fuel thanCNG. They point out that existing conventional internalcombustion engines could remain in use, and that thedistribution network for gasoline is already in place.They also remark that it would not be necessary toinvest time, money and energy in designing and buildingnew kinds of engines.

It is indeed unfortunate that there are no hardeconomic data to indicate which of the CNG or synthet-ic gasoline routes would be preferable. Nevertheless,there are some basic scientific principles upon which adecision can be made. The long-term objectiveadvanced by Committee is to get away from the use ofnonrenewable fossil fuels. Thus any development ofCNG-powered vehicles can only be viewed as a short-term alternative which can reduce our dependence ongasoline and help us through the transition to an elec-tric- and hydrogen-powered transportation sector.

CONCLUSIONThe Committee accepts the view that CNG-powered vehicles represent a short-term optionfor helping Canada reduce its dependence ongasoline. Natural gas is not, however, seen as along-term alternative fuel for the transportationsector since this would not be in keeping withthe strategy of reducing Canada's dependenceon fossil fuel as an energy source.

RECOMMENDATIONThe Committee recommends that compressednatural gas be encouraged for use as a fuel inlarge fleets of vehicles which travel limited dis-tances and are fueled at central filling stations.

3. SYNTHETIC GASOLINE

Mobil Oil has developed a method of making syn-thetic gasoline from methanol using natural gas as theprimary feedstock. It has been called the Methanol-to-Gasoline (MTG) synthesis and, recently. New Zealanddecided to use this process to produce synthetic gaso-line from its abundant natural gas resources. This makeseminent good sense for a country with no petroleum andplenty of methane. It may not make sense for Canadawith its host of alternative energy resources.

New Zealand chose the American Mobil process(for producing gasoline from fossil fuel-derivedmethanol) over an adaptation of South Africa's versionof Fischer-Tropsch synthesis, for a variety of reasons.For a given feed rate of natural gas, the Mobil processhas a higher yield of liquid hydrocarbon products thanhas either of the two commercial versions of the Fischer-Tropsch process. The high selectivity in product forma-tion which is characteristic of the Mobil process resultsin a better overall thermal efficiency (56-58%) than thatachieved by the Fischer-Tropsch route (44-53%),although it is less than that achieved for methanolsynthesis alone (60-64%). Finally, the capital invest-ment required for an MTG process plant is less than thatrequired for a Fischer-Tropsch, Sasol-type installation.

The MTG process produces a gasoline which con-tains few impurities and has a boiling point range similarto that of premium gasoline. With suitable additives,synthetic gasoline has passed tests for carburetor deter-gency, emulsion formation, filterability, metal corrosion,and storage stability. Vehicle tests have shown theproduct to provide performance similar to that derivedfrom premium unleaded gasoline.

Summary of the Mobil Methanol-to-Gasoline(MTG) Process

In the Mobil Methanol-to-Gasoline process,methanol is converted to gasoline over a zeolitecatalyst. Methanol is first reversibly dehydrated todimethylether, then these two oxygenates dehy-drate further to yield light olefins which in turnreact to form heavier olefins. In the last of thesequence of reactions, the heavy olefins rearrangeto form paraffins, cycloparaffins and aromatics(i.e., synthetic gasoline).

2CH3OH j ? CH3OCH3 + H2O

Ilight olefins + H2O

IC5 -f- heavier olefins

Iparaffins + cycloparaffins + aromatics

(synthetic gasoline)Due to the peculiar three-dimensional struc-

ture of the zeolite catalyst used in the process, fewhydrocarbons larger than C10 are produced. Thisis an important feature of the MTG process sinceno distillation or refining of the synthetic gasolineis required to remove heavy hydrocarbon com-pounds.

Source: After Lee, W. et al, 1980.

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With these considerations in mind, some observerssuggest that the production of synthetic gasoline fromCanada's large, and at the present time surplus, naturalgas resources represents a golden opportunity formaking large quantities of liquid transportation fuels.However, the Committee has already stated that wean-ing Canadians from fossil fuels should be the majorobjective of an alternative energy strategy and it wouldnot be consistent with this philosophy for us to recom-mend the production of a hydrocarbon transportationfuel from a nonrenewable resource. For this reasonmethanol is favoured to help us through the transition toa hydrogen- and electric-powered future.

Some claim that synthetic gasoline makes bettereconomic sense than methanol because existing internalcombustion engines could remain in use and becausethe distribution network for gasoline is already in place,neither being the case for methanol. Furthermore, iflarge supplies of synthetic gasoline were made available,it would not be necessary to undergo the undeniablycostly endeavour of designing, testing, building and dis-tributing new methanoMueled automobile engines. Whilethere are insufficient data to determine which routewould be preferable, there are some fundamental con-siderations which can point us in the right direction —and that direction is towards methanol, not syntheticgasoline.

First, no matter how efficient the synthesis can bemade, some energy will be required to convert meths.-clto gasoline. Second, the Mobil process involves deliber-ately converting a readily biodegradable and water-soluble compound (methanol) into a toxic, less clean-burning, more explosive and non-water-soluble sub-stance (gasoline). Third, the technology for methanolproduction is considered to be available "off-the-shelf"whereas the Mobil synthetic gasoline step is as yetcommercially unproven. Fourth, the MTG step involves acapital investment approximately 25% larger than thatrequired for methanol synthesis. Fifth, the continuedavailability of gasoline will hinder the development ofnew types of engines. Sixth, and perhaps most impor-tant, a large commitment to synthetic gasoline produc-tion from the Mobil process would merely substitute onenonrenewable resource (gas or coal) for another (oil) asa source of gasoline. This would completely ignore theconcept of basing our energy system on sustainableenergy resources and would worsen the serious environ-mental problems already developing as a result of theaccelerating use of hydrocarbons as sources of energy.

RECOMMENDATIONBecause synthetic gasoline does not reducehydrocarbon usage and because Hs productionis nonconserving in nature, the Committee

recommends that the production of syntheticgasoline from fossil fuel resources should notbe viewed as an alternative energy solution ofmajor importance for the transportation sector.

4. ALCOHOLS

Two alcohols have generated worldwide interest asalternative liquid transportation fuels or as extenders forgasoline. They are ethanol (ethyl alcohol, grain alcohol,C2H5OH) and methanol (methyl alcohol, wood alcohol,CH3OH). They can both be used pure in speciallydesigned alcohol-burning engines or they can be mixedin varying proportions with gasoline to form gasohol.The United States markets gasohol as a 9:1 mixture ofgasoline and ethanol (10% ethanol) and Brazil marketsa gasohol composed of approximately 20% ethanol. InCanada, Mohawk Oil has refurbished a distillery inManitoba to produce two million gallons of ethanol ayear for blending with gasoline.

In addition to extending supplies of gasoline (anddiesel), the use of alcohols as power fuels can provideother benefits as well. Ethanol and methanol can beproduced from a variety of feedstocks and they arebiodegradable and water-soluble. This means that spillsof alcohols in the environment are much less damagingthan spills of gasoline or other petroleum products.Alcohols can be quickly broken down by living organ-isms and they can be easily diluted to non-toxic concen-trations with water. Because alcohols contain no highlyvolatile fractions, alcohol fires do not start as easily asgasoline fires and, when ignited, they give off much lessradiant heat and can be extinguished with water.

Emissions of carbon dioxide, carbon monoxide andhydrocarbons from alcohol-powered vehicles may bereduced compared with gasoline engines but there is stillsome controversy over the health hazard of aldehydeemissions which would be produced by alcohol engines.If research indicates aldehyde emissions from uncon-trolled engines do pose a serious health hazard, how-ever, oxidation catalysts can be 80 to 90% effective inaldehyde removal. Nitrous oxide emissions are signifi-cantly reduced in alcohol engines because the fuel isburned at lower temperatures than in gasoline engines.(Lower combustion temperatures mean that less of theair's natural content of nitrogen is converted to NO,during combustion.) Alcohols can replace tetraethyl leadas an octane booster in low-quality gasoline, therebyreducing knock, ping and run-on.

There are some disadvantages in mixing alcoholswith gasoline. They must be anhydrous for mixing to bepermanent; if water is present, the alcohol and gasolinerapidly separate, much like oil and vinegar separate aftershaking — a phenomenon called phase separation. Inthis regard methanol is considerably less tolerant ofwater than is ethanol. Gasohol evaporates more easily

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SOURCES, CURRENCIES AND TECHNOLOGIES

than either gasoline or alcohol alone and problems withvapour lock may consequently arise, although this hasnot been the case in the Brazilian experience. Theremay be problems with cold temperature starts in vehi-cles using straight alcohols or gasohols (more so withmethanol than ethanol) but these difficulties have beensolved in Brazil by starting engines with gasoline in coldweather and then switching to alcohol when the engineis sufficiently warm. Further research and developmentwill be required to develop start-up systems which aredependable in the Canadian environment.

The use of pure alcohols for fuel would eliminateproblems of phase separation which are characteristicof gasoline/alcohol blends. It would also eliminate theproblem of making the alcohol anhydrous, as straightalcohol engines can tolerate water (although it lowerspower output).

Much concern has been expressed about the factthat alcohols do not have the lubricating properties ofpetroleum compounds. Nevertheless, experience inBrazil has indicated that accelerated wear of engineparts is not a problem with ethanol-powered vehicles.

Certain components of conventional automobiles(the fuel tank, fuel pump, numerous plastic parts and soforth) can be more or less susceptible to attack byalcohols depending upon their composition. These ob-stacles have, however, been overcome by materialssubstitutions in ethyl-alcohol-burning engines such asthose being built in Brazil, and experts in the automotiveindustry state that similar problems with methanol canbe similarly solved. In fact, a number of American,European and Japanese auto manufacturers are alreadyproducing methanol and dual-fuel (alcohols or gasoline)engines for testing.

CONCLUSIONA great deal of experimentation is being doneworldwide on alcohol engines and on dual-fuelengines which can use either gasoline oralcohols. The ethanol engine has already beenperfected and is being mass-produced in Brazil.Internationally, a number of automobile manu-facturers are also producing prototypemethanol and dual-fuel (methanol/gasoline)engines. These are still being tested but as nomarket exists for metnanol cars, no manufactur-er is making a commitment to large-scale vehi-cle production. On the other hand, no potentialmethanol fuel producers are yet involved incommercial alcohol production because nomarket exists for the fuel.

RECOMMENDATIONTo develop a truly alternative vehicle fueloption for consumers, the Committee recom-

mends that the Government of Canada urgeautomobile manufacturers to produce methanoland dual-fuel engines in Canada. Through thisaction and the development of a methanol-fuel-producing industry, Canada could become aworld leader in methanol production andutilization.

RECOMMENDATIONThe Committee recommends that ethanol pro-duced in this country should be used forextending supplies of gasoline through the pro-duction of gasohol. We do not recommend theuse of ethanol-powered cars as a major alterna-tive transportation option.

5. ELECTRIC AND HYBRID VEHICLES

The era of the electric-powered automobile hasbeen very slow in arriving. About 100,000 electric vehi-cles of myriad design, utilizing numerous different energystorage systems, are on the road around the world — aquantity approximately equal to the number of conven-tional cars produced daily. But without being undulycritical, they could be described collectively as slow,inefficient and expensive. They certainly hold great pro-mise for the future but, to date, there have been severeproblems in developing electric vehicles with theperformance and range people have come to expectthrough experience with gasoline-powered cars. More-over, manufacturers have not yet managed to makeelectric vehicles economically competitive with carspowered by internal combustion engines.

Electric vehicles are ideal for urban use becausethey are quiet, exceptionally clean in terms of operationand emissions, and can be "re-fueled" simply, if slowly,using existing technology. Electric cars would reduce theneed for petroleum, provided that the electricity theyused was not generated at oil-fired power stations.

The main problem with developing a practical andcompetitive electric vehicle has been the inability toproduce inexpensive, reliable, lightweight, energy-denseand durable batteries. A large variety of battery systemsis presently being tested but none has emerged whichcompletely overcomes all of these difficulties. Analystscontinue to say a quantum leap in battery technologymust be made before electric vehicles become competi-tive with conventional cars in the automobile market.

Ford has been experimenting with at least fourbattery systems, including a high-temperature sodium-sulphur battery, but has met with I'lrle success so far.General Motors is committed to a nickel-zinc batterywhich can store two-and-one-half times as much energyper pound as the lead-acid batteries which have tradi-tionally been used in electric cars but admits that range

195

and performance need to be improved. It proposesmarketing electric vehicles as early as 1985, however,and predicts that sales of electric cars will reach 200,-000 units by 1990. American Motors is producing alimited number of electric jeeps and Chrysler is not in theelectric car game at all. The U.S. company Gulf andWestern Industries recently announced development ofa zinc-chlorine battery which it believes will revolutionizethe electric vehicle industry and projects sales of 1.3million units annually by 1990.

A particularly interesting approach to battery de-velopment was introduced to the Committee during itsvisit to the Lawrence Livermore National Laboratory inCalifornia. The Laboratory has been named by the U.S.Department of Energy as the lead institution in develop-ing an aluminum-air battery. What is most exciting aboutthis as yet unproven technology is the fact that thebattery system promises acceleration, range and refuel-ing times comparable to today's autombiles. Costs areprojected to be equivalent to those of conventionalautomobiles when gasoline prices reach the range of $2to $3 per (U.S.) gallon.

It was suggested to the Committee that a prototypevehicle powered by an aluminum-air battery could bedeveloped by 1987, assuming that the Department ofEnergy gives the research a fairly high priority. Expertsat Lawrence Livermore believe that these vehicles couldbe available as early as 1985 if a crash developmentprogram were authorized.

Electricity is produced in aluminum-air power cellsby reacting aluminum metal with atmospheric oxygen inthe presence of an electrolyte. The product of thiselectrochemical reaction is an aluminum compoundwhich can be recycled at an aluminum manufacturingplant. Aluminum battery plates, with their high energy toweight ratio, thus provide a particularly attractive linkbetween the source of electricity and the transportationsector (Figure 6-22). As far as air pollution is concernedwith this particular battery technology, emission controlsystems would be required only at aluminum productionplants and at electrical generating stations.

Aluminum-air batteries are non-rechargeable in theconventional sense, as the battery is replenishedmechanically by replacing exhausted plates with newones. Given the bat f r r /s high energy density, a vehiclemay be driven up to several thousand kilometres on oneset of plates but vehicle range is determined by thenecessity to add water to the battery, probably every400 to 600 kilometres. When water is added to thebattery, the waste aluminum compound formed duringoperation is removed for recycling.

The Committee also learned of Canadian interest indeveloping such a battery system. The DefenceResearch Establishment in Ottawa has investigated thealuminum-air battery for military applications. A com-

pany in Toronto is interested in the battery's commercialdevelopment and has an arrangement with LawrenceLivermore for the exchange of R & D information.

Since the United States is already proceeding withan active program to develop the aluminum-air batteryfor automotive applications, the Toronto company pro-poses to investigate other, more specialized uses ofsuch battery systems in remote communities, at isolatedtelecommunications facilities, in navigational aids, in thehousehold, in recreational settings, in mine vehicles, andfor emergency purposes. This company does not intendto develop the aluminum-air battery for an automotiveapplication but instead plans to import that technologyfrom the United States.

CONCLUSIONAlthough the development of the aluminum-airbattery is still in its early stages and remains arisky venture in a commercial sense, its poten-tial for application in Canada looks very promis-ing considering our abundant hydro-electricresource and our large aluminum smeltingcapability.

RECOMMENDATIONThe Committee recommends that the FederalGovernment closely monitor the developmentof the aluminum-air battery system and that itsupport commercialization of this power systemin Canada.

As well as in the United States, research on electricvehicles is being carried out in the United Kingdom,France, West Germany and Italy, and a large commit-ment to electric vehicle RD & D has been made in Japan.Interestingly enough, these countries are all relativelysmall and densely populated and the interest in electriccars may derive as much from environmental concern asit does from worry about petroleum supplies.

Very little electric vehicle research is yet being donein Canada but one company in Montreal has producedtwo types of vehicles powered by lead-acid batteries. A1978 report on Canadian electric vehicle productionstated that practically all the resources required to de-velop an electric vehicle industry exist in Canada andthat most of the components for a complete vehicle canbe produced by Canadian companies already supplyingparts for vehicles under the Canada-U.S. auto pact.

CONCLUSIONThe Committee recognizes that if Canada isgoing to direct its efforts towards developing a

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SOURCES, CURRENCIES AND TECHNOLOGIES

Figure 6-22: A COMPARISON OF THE ALUMINUM-AIR BATTERY AND THE INTERNAL COMBUSTIONENGINE

PRIMARY'ENERGY

SOURCES,

INTERNAL COMBUSTION ENGINE

Primaiy energysources

Natural gas HydroCrude oil SolarUraniurn Coal

A New Approach to Automobile PropulsionThe aluminum-air battery provides electrical trihydroxide which can be recycled to produce

energy by reacting aluminum metal with atmos- more battery plates. Thus the reusable aluminumpheric oxygen in the presence of an aqueous provides the link between any source of electricityelectrolyte. The reaction product is aluminum and the transportation sector.

The Car5-passenger vehicle weighing 1260 kilograms (2800 Ib)Propelled by a 63.4 kilowatt (85 horsepower) engine

— Travelling a distance of 400 kilometres(250 miles}

Hs Energy Requirements'»

Aluminum-air battery14 kilograms of aluminum produced with 140-180 kWhof electricity, derived from—• 0.27 barrel of crude oil,• 72 kilograms of coal, or• 4 grams of uranium oxide.

Internal combustion engine

38 litres of gasoline, derived from -• 0.25 barrel of crude oil,• 90 kilograms of coal, or• 180 kilograms of biomass.

The above data suggest that vehicles powered by aluminum-air batteries are not many years away fromeconomic viability, if the RD& D program at Lawrence Livermore Laboratory lives up to its promise.

( t ) The numbers quoted are characteristic of the U.S. energy system, and might differ in detail in the Canadian context.

Source: After "The Aluminum-Air Battery for Electric Vehicles: An Update". 1980. p. 3.

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hydrogen and electric energy future, it mustalso ensure that there are markets available forthese energy currencies as they comeon-stresm.

RECOMMENDATIONThe Committee recommends that Canadabecome much more actively involved in electricvehicle research, development and demonstra-tion. This effort should be a systems approachwhich concentrates not only on propulsion butalso on the design and construction of all thecomponents required to produce a completelyCanadian electric vehicle.

One fear expressed by those who favour the de-velopment of electric vehicles is that in the headlongrush to develop alternatives to gasoline, the electric carmay be bypassed because battery development hasbeen so slow. For this reason, some feel an intermediateoption between the internal combustion and the all-elec-tric vehicle — a hybrid vehicle — represents a promisingarea for research and development which would contin-ue to keep the electric car in the picture.

Hybrid vehicles are powered by combining an elec-tric motor with either a fuel cell or a gas or diesel engine.In the latter type, the heat engine cuts in during periodsof high power requirements, such as during acceleration,and the battery meets the lower demand for powerwhich is characteristic of cruising at one speed. In thecase of the fuel cell/ battery hybrid vehicle, the oppositewould probably hold true — the fuel cell would meet lowpower requirements and the battery would switch inwhen extra power was needed.

Hybrid propulsion systems could appreciablyreduce gasoline consumption by meeting some of thetransportation sector's energy demand with electricity.At the present time, however, a vehicle powered in thisfashion would be significantly more costly than a con-ventional one because it would require two power-gen-eration units and a more sophisticated driver-control andpower-management system than is presently required. Afurther disadvantage of hybrid vehicles is that it may benecessary to reduce engine performance expectationsto make the cost of hybrid vehicles competitive.

CONCLUSIONHybrid propulsion systems are costly and, bydefinition, transitional between conventionaland electric vehicles. Much work must be doneto perfect such systems and at least a decadewould be required to introduce hybrid vehiclesin significant numbers.

RECOMMENDATIONThe Committee believes that RD&D in this coun-try should concentrate on all-electric vehiclesrather than on heat engine/electric hybrids. Ifhybrid propulsion RD&D Is pursued at all, itshould be directed towards developing a fuelcell/electric hybrid. This would aBow Canada todo research In two areas of nonconventionalpropulsion simultaneously, so that at somefuture date each technology could be profitablyexploited on its own.

6. HYDROGEN

Hydrogen has a number of characteristics whichmake it a suitable replacement for gasoline in the trans-portation sector. Certainly one advantage is that it canbe used in modified internal combustion engines and itsintroduction should not therefore be limited by the tur-nover of conventional automobiles. In other words, whilethe infrastructure to support a H2-powered transporta-tion system is being put in place, it will be possible tooperate dual-fuel gasoline/hydrogen vehicles, perhapssmoothing the transition from a gasoline-based to ahydrogen-based transportation sector.

There are also environmental reasons why hydrogenis a better fuel than gasoline. The combustion of purehydrogen releases only water and nitrogen oxides, whileburning gasoline releases CO, CO2, nitrous oxides,hydrocarbons and, in some vehicles, lead into theatmosphere.

Perhaps the major problem with hydrogen as atransportation fuel is storage. The section- on Hydrogendiscusses H2 storage in some detail however, so thefollowing paragraphs describe only those methodswhich show particular promise for transportationapplications.

Liquid hydrogen can be used as a power'fuel butthere are particular difficulties involved with storing it.First, it must be kept cold and. since it boils at -217°C.well insulated. Furthermore, since hydrogen has only afraction of the energy value of gasoline by volume, alarge quantity must be carried on board a vehiclemaking tank size unacceptable if long-range driving isexpected. Both West Germany and the United Stateshave built experimental cars fueled by liquid hydrogenand research is continuing to reduce the cost of suchvehicles, to demonstrate their safety, and to extend theirrange.

The storage of hydrogen as a metal hydride hasalso been examined. Although metal hydrides are heavy,they can be used for storing hydrogen in automotiveapplications where weight is not a serious consem. Forexample, large vehicles such as buses can accommo-

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date the added weight. In West Germany, Daimler-Benzhas demonstrated the feasibility of operating hydrogen-powered buses and a fleet of 20 such vehicles is cur-rently being built for use in Berlin. Similar buses havebeen tested in several cities in the United States, andPittsburgh is considering the purchase of a fleet ofhydrogen-powered buses. (The environmental advan-tages of burning hydrogen fuel are particularly attractivein urban areas where exhaust emissions pose a poten-tially serious health problem.)

Liquid hydrides are also of interest as they avoid theweight problem of metal hydrides. A liquid hydride is anyliquid which contains hydrogen. Gasoline is an exampleof a liquid hydride but it has a high carbon to hydrogenratio. This means that in addition to producing heatupon combustion, a large amount of carbon dioxide isgenerated when gasoline is burned. Liquid hydrideswhich do not contain carbon, and which have a highproportion of hydrogen relative to a carrier element(such as nitrogen), release primarily water upon com-bustion. Synthetic liquid hydrides resembling ammoniaare attractive for tnis reason and are being activelyinvestigated in the United States.

A liquid hydride can be carried on board a vehicleas a hydrogen source, and when H2 is required, it isgenerated in a catalytic cracker (a device which canseparate hydrogen from a liquid hydride). A company inCalifornia claims to have a test vehicle running on such ahydrogen carrier, but the vehicle has not been independ-ently tested. At the present time, these compounds arethought of as a means of providing on-board H2 for usein internal combustion engines, but they can be used infuel cells as well.

CONCLUSIONLinking a fuel cell with a liquid hydride sourceof hydrogen, such as methanol, for groundtransportation appears to be a particularly inter-esting area for investigation.

Liquid hydrogen (LH2) holds promise for use as anaviation fuel. Hydrogen was used for its buoyant proper-ties in airships in the 1920s and 1930s but it was neveremployed as a fuel. The history of accidents with thesevehicles still raises serious questions about the safety ofhydrogen, and the spectacular explosion of the Germanairship Hindenburg in May 1937 is still vivid in the mindsof many. However, the hydrogen on the Hindenburg wasnot stored in the way a fuel would be stored, and onlypeople who jumped from the ship or were burned withdiesel fuel were seriously injured or killed. The burninghydrogen soared upwards because of its lightness andprobably injured no one. In any event, proponents ofhydrogen use argue that, although hydrogen is highly

combustible, it can be handled safely and without inci-dent, a fact which has been well demonstrated duringthe U.S. space program.

No definitive studies comparing the safety of jet fueland liquid hydrogen have been completed, yet hydrogenseems to offer certain advantages. !f a pressurized tankof hydrogen is ruptured and the gas ignited, the fireburns upwards because hydrogen is lighter than air. Itdoes not spread sideways like a liquid-fuel fire. Thischaracteristic means that if a plane's fuel tanks wereruptured, say on a forced landing, and the fuel wasignited, a hydrogen-powered plane would not sit in apool of ft • •, ie as would a modern jet.

Saf/1; considerations aside, liquid hydrogen has afurther advantage over conventional jet fuel in that it isvery iig.'it in an energy-per-pound basis. LH2 has anenergy cor tent of 52,000 Btu/lb., which is about twoand a half times that of conventional jet fuel. Conse-quently the use of LH2 could lead to considerable energysavings since a conventional aircraft consumes much ofits energy taking off with and carrying its own heavy fuel.Since initial take-off weights would be lower with hydro-gen-powered aircraft, less thrust would be required andthey would be quieter than conventional jets. A finaladvantage of hydrogen use would be a reduction inatmospheric pollution, as water and nitrogen oxides arethe only emission resulting from combustion.

These advantages must be weighed against severaldisadvantages. While hydrogen has a higher energycontent per pound, it has a lower energy content byvolume than jet fuel. In fact, LH2 aircraft would requirethree to four times the volume of fuel needed in aconventional jet. The design of a hydrogen-poweredairplane would therefore have to allow space for verylarge volumes of fuel and new insulation materials andmetals would have to be developed to contain the fuel.

After examining the advantages and disadvantagesof hydrogen and assessing the future supply prospectsfor oil, the Lockheed Corporation is moving towardscommercialization of a liquid-hydrogen-fueled aircraft.Lockheed is redesigning the L-1011 TriStar to accom-modate LH2 tanks within the fuselage, and is adaptinggas turbine engines to burn hydrogen. The corporationhas proposed that the United States, Britain, Germanyand Saudi Arabia build and operate a fleet of liquidhydrogen-powered airfreighters as an experiment.Canada will participate in the demonstration phase ofthis program and one of the hydrogen fueling centresmay be located at Mirabel airport. With an intensiveresearch and development program, Lockheed hopesthat this fleet will be operating by 1987. Questions aboutthe cost and supply of hydrogen fuel remain, but Lock-heed is convinced that liquid hydrogen is the aviationfuel of the future.

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RECOMMENDATIONCanada should pursue the use of hydrogen as should form part of the overall RD&D efforts ofan alternative aviation fuel and this activity Hydrogen Canada.

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five-fold amplification of the tidal range between the Gulfof Maine (2 to 3 metres) and the head of the Bay (16metres) makes the Bay of Fundy one of the few sites onEarth where large-scale tidal power generation can beconsidered commercial.

An important feature of the tides is that regardlessof how much they vary locally, they occur in an orderlyfashion and are therefore predictable. This predictabilityis a major advantage in exploiting tidal energy becauseone can forecast with assurance the amount of energythat will be available next week, next month or nextyear.

While the Bay of Fundy is one of the most favouredtidal power sites in the world, others which have beenstudied include Penzhinskaya Guba in the Sea ofOkhotsk in the U.S.S.R.; Cook Inlet in Alaska; theSevern Estuary in the United Kingdom; San Jose, Argen-tina; Inchon Bay, South Korea; and the Jervis andSechelt Inlet near Vancouver (Figure 6-23). Three sitesthat went beyond the scrutiny and study stage, andwhich are discussed later, are the commercial tidalpower station at La Ranee in Brittany and the small

experimental stations at Kislaya Guba in Russia and onYueqing Bay in China.

B. ADVANTAGES AND DIFFICULTIES IN EXPLOIT-ING TIDAL ENERGY

The exploitation of tidal energy in Canada is attrac-tive because the Bay of Fundy provides some of thebest sites on Earth. But there are other advantages thatwarrant consideration as well.

• A tidal development utilizes a readily available amiinexhaustible energy source.

• The resource is accurately predictable.

• There are no fuel costs and maintenance costs of atidal facility should be low.

• A tidal-electric plant is a clean, non-polluting facility.

• The cost of tidal energy should remain relatively stablethroughout the life of the plant.

• A tidal power plant would place Canada in the fore-front of a technology of interest to a number ofcountries. It could also provide an opportunity to

Figure 6-23: THE LOCATION OF POTENTIAL TIDAL POWER SITES

Source: After Clark, 1979, Figure 1.

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Tidal Power Schemes

The lack of concurrence between the lunar-oriented tidal rhythm and man's solar-orientedlife-style poses unique problems for planners benton exploiting tidal energy on a large scale. Manydevelopment schemes have been put forward overthe years but most have been either too complexor too unattractive economically, or both. Thesimplest and least expensive scheme is a single-effect tidal operation at the mouth of a singlebasin. Here the sluices in a barrier dam areopened on the flood tide to fill the basin. At hightide, the sluices are closed and the ebbing seagives rise to a head of water between the basinand the sea. Flcv 's then permitted through theturbines which, in turn, generate electricity (Figure6-24). The single-basin concept with a single-effect mode of operation does not produce contin-uous power. Its period of power generation isdictated by the lunar cycle and maximum energyis often delivered at times of low demand.

A variation on this theme is a turbine thatfunctions both in the basin-to-sea direction and inreverse. This single-basin double-effect operationpermits electric generation during both emptyingand filling and is the scheme employed at the LaRanee tidal development. It too, however, doesnot produce continuous power. Engineering worksin these single-basin schemes are less complexthan for double-basin schemes and less costly.

Discontinuous energy output from the single-basin scheme can be overcome with hydraulically-linked basins. A coastal configuration favourableto the creation of two storage basins is necessaryfor this kind of development. The water level isheld high in one basin and low in the other, withgenerating units linking the two. The high basin isfilled as the tide comes in through one set of gatesand the low basin is emptied as the tide goes outthrough another set of gates. The scheme'sattraction lies in its ability to generate continuouspower although the output is less than that froman equivalent single-basin scheme. Since thelinked concept requires an interconnecting water-way with a power plant and additional dikes andgate structures to control the level of each basin,capital costs are greatly increased

A paired-basin development also affords flex-ibility in electrical generation. The tie in this case iselectrical with a generating plant located in eachbasin. One basin is operated at a low level withenergy being generated on the flood tide, 'while

the other functions as the high basin with genera-tion on the ebb tide. Capital costs are commensu-rate with the hydraulically-linked scheme (Clark,1979).

Figure 6-24: TYPES OF TIDAL DEVELOPMENTS

Single Basin Single Effect

SEA

Single Basin Double Effect

SEA

Double Basin Hydraulically Linked

Double Basin Electrically Paired

Source: Clark. 1979, Figure 2.

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develop an industrial capacity not solely orientedtowards tidal power but also towards low-head hydro-electric development.

The main disadvantage of tidal energy is itsdependence on the lunar rather than the solar cycle,which changes the daily timing of power generation.Other difficulties arise from environmental and economicconsiderations.

• Too little is known at the present time about the likelyeffects of a tidal power development on the erosion ordeposition of sediments.

• It is difficult to assess what the ecological impact of atidal barrage might be. Altering the tides in the Bay ofFundy could, however, reduce biological productivityon the intertidal mudflats which are the feedinggrounds for many of the migratory birds which flyalong the east coast of North America.

• The construction of a tidal barrage will modify thetides themselves and in so doing could lower theoutput potential of the generating facility.

• Tidal developments are capital-intensive and theremay be difficulties in amassing the large investmentinitially required.

C. INTERNATIONAL AND CANADIAN DEVELOP-MENT

France, with its commercial tidal-electric facility atLa Ranee, is one of only three nations operating tidalpower stations today. With an installed capacity of 240MW. the French installation is a single-basin double-effect scheme and consists of a barrage across theestuary of the La Ranee river which opens into theEnglish Channel near St. Malo. Construction began inJanuary 1961 and the powerhouse, barrage and shiplock were built within three cofferdams. The powerhouseis fitted with twenty-four 10 MW bulb-type turbogenera-tors which can act as pumps or turbines in either direc-tion. In December 1967, the 24th bulb turbine wasplaced in service and the project was completed.

The decision to build La Ranee was not based oneconomic considerations as the cost of oil was so low inthe early 1960s (generally less than $2 per barrel inworld markets) that alternative energy schemes were notcompetitive. However, with the increases in oil pricesover the past decade. La Ranee is now an economicallycompetitive generator of electricity in France. In fact, aCommission was established in 1975 to study the possi-bility of constructing a much larger, multi-purpose tidalpower scheme (from 6,000 to 15,000 MW) at nearby liesChausey. This development would combine electricalgeneration with harbour facilities, agriculture and tour-ism, but has not been precisely defined or costed.

One of the experimental stations is the Russian 400kW tidal powerplant which was completed in 1968 atKislaya Guba. This small station is located in the Gulf ofUra about 45 km north of Murmansk, near existingtransmission lines. The site was selected because aminimum of civil works was required and it provided anopportunity to study material stresses and constructiontechniques in a hostile environment. The tidal amplitudeat Kislaya Guba is about 4 metres, which is too small topermit justification of the project on economic grounds.It is reported, however, that the plant has performed sowell that a second 400 kW bulb-type turbine-generatoris to be installed in the near future.

China operates the 500 kW Jiangxia tidal station onYueqing Bay in the East China Sea. Tidal-electriccapacity is presently being doubled at Jiangxia and six500 kW turbines are ultimately planned for the site.

As far as Canada is concerned, most tidal powerstudies consider development in the Bay of Fundy,although several sites have recently been investigatedalong the British Columbia coastline. Dr. W. RupertTurnbull of Rothesay, New Brunswick, the inventor ofthe variable pitch propellor, was one of the first men toappreciate Fundy's potential. In 1919 he proposed atidal project for the confluence of the tidal estuaries ofthe Petitcodiac and Memramcook Rivers in ShepodyBay. but it was not until the closing months of theSecond World War that the first major study was under-taken. This project investigated a tidal development inShepody Bay but along with the studies which followedin the 1950s, the conclusion was the same — tidalpower was uneconomic.

In 1966. the Federal Government, New Brunswickand Nova Scotia initiated yet another investigation oftidal power in the Bay of Fundy. The Atlantic TidalPower Programming Board (ATPPB) came to a familiarconclusion however: tidal power developments, whiletechnically feasible, were not cost competitive with otherenergy sources. The Board also recommended thatfurther investigation only be undertaken when interestrates dropped sufficiently to indicate that economicdevelopment was feasible; or a breakthrough in tech-nology indicated the likelihood of designing an economicfacility; or alternative energy sources became exhaust-ed.

Following the ATPPB's report, increases occurredin the costs of conventional energy to the point wheretidal power looked promising. Accordingly, in February1972 the Federal Government, New Brunswick andNova Scotia established the Bay of Fundy Tidal PowerReview Board (TPRB) to go over the findings of the oldAtlantic Tidal Power Programming Board. In September1974 it announced that the economic prospects of tidalpower had improved so much that a further detailedinvestigation was desirable.

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SOURCES, CURRENCIES AND TECHNOLOGIES

Acting on this recommendation, the three Govern-ments signed an Agreement in December 1975 wherebya Management Committee was formed to carry out aStudy Program under the general direction of the TidalPcwer Review Board. The Committee's objective was todevelop

...a firm estimate of the cost of tidal energy on whichto base a decision to proceed further with detailedinvestigations and engineering design.

In November 1977, the Bay of Fundy Tidal PowerReview Board published its findings in a report entitledReassessment of Fundy Tidal Power. The report con-cluded that: (1) the construction of a tidal power plant inthe Bay of Fundy was economically feasible and itsoutput could be integrated into the projected supplysystem for the Maritime Provinces; (2) a tidal plantwould eliminate the need for new fossil-fueled generatingstations in the expansion plans of Maritime utilities; (3)the building of a plant is conditional upon direct andsubstantial financial participation by governments and aminimum investment in the range of $3 billion would berequired: and (4) the results warrant proceeding withdetailed engineering studies and environmental and

socio-economic investigations. Three sites, indicated inFigure 6-25, were considered to provide the best pros-pects for development.

The first phase of the 1977 reassessment endedwith the above conclusions and remains the definitivestudy on tidal power in the Bay of Fundy. Adding its costof $3.4 million to that of earlier studies, one finds thatsome $8 million has been spent investigating Fundy'stides. The original intention was to follow this work witha second phase entitled the "Pre-lnvestment DesignProgram". This did not happen, however, because ofcost (estimated at $33 million in 1978 and $50 milliontoday) and the failure to establish the Maritime EnergyCorporation (MEC), under whose auspices the work wasto proceed. The three-year $50 million Design Programwas intended to provide a detailed assessment of all theenvironmental, socio-economic and engineering aspectsof Fundy tidal development.

CONCLUSIONAfter some $8 million spent on studies conduct-ed over a period of 60 yea», the harnessing of

Figure 6-25: PREFERRED SITES FOR BAY OF FUNDY TIDAL POWER DEVELOPMENT

Source: After Canada. Bay of Fundy Tidal Power Review Board, 1977, p. 15.

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Fundy Tidal Development

The 1977 Reassessment of Fundy Tidal Poverselected three sites in the Bay of Fundy for detailedconsideration, from an initial group of 37. Details ofthe three sites are given below.

Table 6-13: COMPARATIVE DATA FOR THREETIDAL POWER SITES IN THE BAY OFFUNDY

Site Location

ShepodyBay(A6)-Mary's Point toCape Maringouin

Cumberland Basin(A8)-Peck's Pointto Boss Point

Cobequid Bay(B9)- EconomyPoint to CapeTenny

InstalledCapacity(mega-watts)

1550

1085

3800

AverageAnnualOutput(giga-watt-hours)

4533

3423

12653

Capital Costsin Millions of

Dollars1977 1981<a>

2197 2966

1234 1666

3988 5384

I" Inflation is assumed to have increased capital costs by 35% overthe four-year period 1977-1981 (calculated by the authors).

Source: Canada. Bay of Fundy Tidal Power Review Board. 1977, p.5.

Cumberland Basin is the preferred site for tidaldevelopment for a variety of reasons. It is the small-est of the three projects and technical problemswould be minimized. It is a joint provincial site whichaffords the best opportunity to equalize benefits be-tween New Brunswick and Nova Scotia. When ready

for commissioning (1995 or later), the Maritimeswould be able to absorb an estimated 90% of itspover output. If, on the other hand, developmenttcok place at either Shepody Bay or Cobequid Bay,an export market would be required for the energysurplus to Atlantic Canada's needs. (In this regard,talks held in February 1981 between the Premier ofNova Scotia and the Chairman of the Power Author-ity of the State of New York indicate renewed interestin financing the larger Cobequid Bay development.)Finally, environmental concern over possible changesin tide levels along the New England seaboard wouldnot be an issue in a Cumberland Basin development.

There have, however, been substantial changesin the assumptions underlying the 1977 study. Theprice of imported oil is approaching $40 a barrel; newenergy forms (natural gas and nuclear) will soon enterthe Maritime market and provide competition for tidalpower; and electrical energy load growth has beenless than anticipated because of high oil costs and agreater energy consciousness. This indicates theneed for updating the 1977 work. It is thought that anew economic feasibility study would take some sixmonths to complete at a cost of $300,000.

In a related development, work commenced inJune 1980 on a 20 MW demonstration project in theAnnapolis Basin, near the mouth of the Bay of Fundy,to be completed in mid-1983. This $46 millionproject, jointly funded by the Federal Government($25 million) and the Province of Nova Scotia, willtest a modified straight-flow (Straflo) turbine currentlyused in many low-head river projects in Europe.Compactness, sufficient space for a iarge-capacitygenerator, easy access, effective generator coolingand simplicity are some of its desirable characteris-tics. The Canadian version is twice the size of theEuropean turbine and, if it is found to function ade-quately in a saltwater environment, it may findapplication in future Canadian river and/or tidalpower systems.

ftmdy's tides remains a massive, untried andambitious project While tidal power is a renew-able, reliable and inflation-free source ofenergy, there are obstacles confronting its de-velopment. These include the completion of apre-investment design program; the amassingof capital to finance a project; and a recentdecline in the rate of growth of Maritime electri-cal energy demand.

RECOMMENDATIONTo determine whether a tidal power develop-ment in the Bay of Pundy remains a viable

proposition, the Committee recommends thatan economic feasibility study be initiated with-out delay to verify the 1977 conclusions of theTidal Power Review Board, and that funding inthe order of $300,000 be allocated for thispurpose.

RECOMMENDATIONIf the findings of the economic feasibility studyare favourable, the Committee further recom-mends that a three-year pre-investment designengineering, socio-economic and environmen-tal study, as outlined in the 1977 Report, be

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undertaken and that funding in the order of $50million be allocated for this purpose.

RECOMMENDATIONIf the findings of the definitive study are favour-able, the Committee recommends that tidalpower development be undertaken in the Bayof Fundy.

2. WAVE ENERGY

The prospect of using the energy of waves hasprobably interested man since he first witnessed theawesome power of breakers crashing against the shore.Certainly the effort to design machines to harness thisrenewable energy source has gone on for quite sometime. Since 1876, 150 patents for wave power deviceshave been issued in the United States and some 350patents are registered in the United Kingdom. Recentlythere has been a resurgence of interest in developingwave power devices as uncertainty about worldpetroleum supplies increases and as concern about theappropriateness of using nonrenewable energyresources develops.

Waves represent a very large and renewable sourceof energy. The resource is widely distributed throughoutthe world and it has a far greater total energy potentialthan does tidal power. But there are severe problems toovercome before wave energy is widely utilized.

The prime difficulty arises out of trying to marry anecessarily sophisticated technological device to a veryoften hostile environment. To assure reliable operationfor long periods means, at the present time, a prohibitivecapital investment per unit of energy output.

Other disadvantages associated with developingwave power arise out of the geographically widely-dis-persed and intermittent nature of the source. Thesecharacteristics pose problems with the collection, trans-portation and storage of wave energy and make integra-tion of this new energy source into existing energysystems difficult.

The United Kingdom is probably pursuing wavepower research more vigorously than any other nation,having decided in 1976 to fund this energy alternative atan accelerated rate. The program now in place shouldallow it to choose the most promising device from thewide array being tested and give a grant to build afull-scale demonstration generator to supply electricityto the national grid.

Today Britain's two most promising designs are the"Salter Duck" and the "Cockerell Raft". The SalterDuck is an oscillating vane device which uses the rollingmovement of the waves. It can, apparently, extract aver90% of available wave energy under experimental con-

ditions. The Cockerell Raft floats on the surface andfollows the contours of the waves. Electrical energy isgenerated by the movement of hydraulic motors orpumps which connect a series of these rafts.

Sweden is conducting a wave energy research pro-gram which should be completed in 1983. Other coun-tries such as Norway, Finland, West Germany andFrance are also conducting wave power research.

In Japan full-scale generators of British manufac-ture powered by air-driven turbines have been installedin a ship called the Kaimei. This ship has chambers inthe hull which are open to the sea and the movement ofwaves causes the water level in them to change, forcingair in and out. This moving air is passed through a seriesof rectifying valves to make its flow unidirectional, and itis then forced through a turbine to produce electricity bymeans of a generator. The Kaimei has been registeredas a 1 MW power station and can supply electricity tothe Japanese national grid. This research and demon-stration program has been underway for two yearsunder the auspices of the IEA with Britain, Japan, Ire-land, the United States and Canada as activeparticipants.

Canadian R & D has centred on studying an innova-tive design for a contouring raft ckvice and testing awave-absorbing plate but work has been done to assessthe magnitude of the Canadian wave power resource aswell. These latter studies have indicated that the amountof exploitable wave energy in Canada is small comparedwith that of the United Kingdom, Norway or South Africaand is spread out over a wide area. This suggests thatthere are only limited possibilities for exploiting theresource in this country.

CONCLUSIONThe Committee recognizes that wave powercould only be considered as a minor supple-ment to conventional power sources in Canada.

RECOMMENDATIONThe Committee believes that Canada shouldkeep up to date with international develop-ments in the field of wave power research andshould continue to participate in joint R&D ven-tures. It also recommends, however, that wavepower research should have no priority statusin Canadian energy research and developmentprograms.

3. OCEAN THERMAL ENERGY CONVERSION(OTEC)

The Earth's oceans act as giant solar energy recep-tors which absorb much of the sun's radiation arriving at

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our planet's surface. This energy is stored in the form ofheat. The surface waters warm up first but since warmwater is lighter or less dense than cold water it tends toremain on top. This reduces the rate at which oceanwaters mix and, as a consequence, the Earth's largesaltwater bodies have become thermally stratified. Verydeep waters are universally cold but surface waters,particularly in the tropics, can be quite warm bycomparison.

It is this difference in temperature between surfaceand deep waters which is exploited in generating oceanthermal energy conversion (OTEC) power. With a tem-perature differential of about 18°C, an OTEC plant canconvert the water's stored thermal energy into mechani-cal and, subsequently, electrical energy.

The exploitation of temperature gradients in the seafor energy production looks attractive to some tropicalnations for a variety of reasons. First, oceanic thermalgradients offer a virtually limitless energy supply and,second, OTEC plants require no fuel. But there are otherconsiderations as well. The energy output of OTECinstallations would vary only marginally with seasonalwater-temperature differences and the thermal energyresource itself is continuously exploitable. OTEC plantsdo not require any radically new technology, althoughexisting technology would have to be refined and opti-mized before commercial installations are constructed.

OTEC facilities could generate electricity directly or,alternatively, they could produce a variety of energy-intensive products such as hydrogen, methanol,ammonia, aluminum, chlorine and magnesium. The cir-culation of large quantities of nutrient-rich, cold, deepwater required for energy production could enhancebiological production in the vicinity of the plant. And,finally, OTEC-derived electricity could help reduce futurepolarizations among nations over energy resources.

On the other hand, there are some difficultiesassociated with OTEC development which cannot beoverlooked. The installations will be very large and verycapita! intensive. They could also have detrimental envi-ronmental effects although these have yet to be deter-mined and much study has to be done in this area. Thebest sites for OTEC development are often located farfrom centres of power consumption; thus there may bedifficulties and losses in the transmission of energy fromthe production site.

The main problem with developing closed-systemOTEC power plants arises out of the necessity ofexchanging heat from the seawater to a working fluid.With the relatively small temperature differences beingexploited in this process, large surface areas for heatexchange are required and large flows of water arenecessary in order to extract utilizable quantities of heat.The cost of the heat exchangers very much increasesthe capital cost of an OTEC installation (they can repre-

Ocean Thermal Energy Conversion Processes

There are two types of OTEC plants whichhave been considered for development. In theopen OTEC process, warm surface water isevaporated and the resultant water vapour drivesa turbine to generate power. The steam is thencondensed by cold water which is pumped upfrom the depths and subsequently returned to theocean. This is called an open system becauseseawater drives the plant and no working fluid isrequired. The main problems with this design arethe size of the turbine required (some 14 metres indiameter), the removal of dissolved gases from theseawater and the corrosive properties of saltwa-ter.

OTEC installations may perhaps more profit-ably operate using a closed system. In this pro-cess, warm water is used to heat a working fluidsuch as ammonia, propane or fluorocarbons,which evaporates, drives the turbine and is subse-quently condensed by cold water (Figure 6-26).Warm water enters the OTEC plant at location 1,is pumped through the heat exchanger at location2, and leaves the plant at location 3. The heatexchanger-evaporator (2) vapourizes the workingfluid. This vapour is expanded in a turbine (4);then it leaves the turbine to enter the condenser(5). From there a pump returns the working fluid tothe heat exchanger-evaporator (2). The cold waterenters at location 6 and flows through the heatexchanger-condenser (5), leaving the plant atlocation 7. The turbine operates the electric gen-erator (8), providing electric power to the user.

Figure 6-26: SCHEMATIC DIAGRAM OF ACLOSED-CYCLE OCEAN THERMALPOWER PLANT

Source: Knight et al, 1977, p. 3.

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SOURCES, CURRENCIES AND TECHNOLOGIES

sent up to half the total plant investment) and theexchangers themselves present a continuous problemwith corrosion and fouling with marine creatures on theirseawater side.

There are also serious legal questions which mustbe addressed and resolved at the international level overwho owns oceanic resources before extensive commer-cial development of OTEC power takes place.

Because of the great potential of the ocean thermalenergy resource, a number of countries are interested inits development. Projects have been considered off thecoasts of Curacao, the Ivory Coast, Florida, Brazil, Zaire,Tahiti and Martinique and nations most actively involvedin R&O include France, Japan and the United StatesAdditional interest has been shown by a consortium ofEuropean industrial firms known as EUROCEAN andanother industrial consortium is conducting a mini-OTECexperiment in cooperation with the State of Hawaii. The

United States Government OTEC development programwas funded at $38 million during fiscal 1979.

As mentioned earlier, OTEC facilities may only beseriously considered in regions where temperature differ-ences between shallow and deen waters are 18°C orgreater. This prerequisite essentially limits the exploi-table resource to the tropics as temperature differencesof at least this magnitude are required before plants ofacceptable efficiency can be constructed (Figure 6-27).Efficiency is not important in terms of energy costbecause the warm water required to power a plant isavailable at no cost. It is important, nevertheless, indetermining the capital cost and size of a plant requiredto produce a given amount of power. With the efficiencybeing low (a typical OTEC plant may have an operatingefficiency of 4 % or less), very large amounts of warmand cold water must be circulated to extract energy.Thus the lower the efficiency the greater the size of theplant and the greater the required capital investment.

Figure 6-27: ZONES'»' OF THE EARTH'S OCEANS FAVOURABLE FOR THE EXTRACTION OF ENERGY FROMTHERMAL GRADIENTS

| Exploitable temperature difference between the surface and adepth of 1000m.

) Exploitable temperature difference between the surface and adepth of 500m.

"" These zones refer to regions where the temperature differential between surface and deep waters (500 or 1,000 m) is alwaysgreater than 18°C.

Source: After Brin, 1979, p. 85.

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CONCLUSION RECOMMENDATIONSince the scale and cost of an OTEC plant The Committee believes that research and de-depend upon the temperature differential at a velopment of OTEC energy should not besite, OTEC units will not be economic in funded by the Federal Government at this time.Canadian waters. _---..: ~ ?

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edge of the atmosphere ultimately reaches the surfaceof the Earth, either as direct or diffused radiation. In theEarth's temperate regions, mid-day solar radiation, on aclear day perpendicular to the sun's rays, typicallyreaches 260 Btu/foot2/hour (823 watts/metre2/second). By comparison, a barrel of crude oil containsapproximately six million Btu, or the equivalent of23,000 hours of sunshine on that one square foot.

Expressed in this way, available solar energy doesnot appear very impressive, yet the total amount ofenergy involved is immense. To illustrate this point, theamount of sunlight received in one year by 4,300 squaremiles of land, which is only 0.15% of the surface area ofthe contiguous United States, is roughly equal to thatcountry's entire 1970 energy consumption.

Solar radiation is diffuse and intermittent both sea-sonally and diurnally. Substantial areas of collectors aretherefore needed to make large-scale use of thisresource and costly backup systems and/or storagefacilities are required for some applications. Yet in spiteof these disadvantages, solar energy has numerouscharacteristics which make it attractive as a futureenergy source. As already noted, the total amount ofenergy available is immense. Solar energy is also inex-haustible, ubiquitous, free and relatively non-polluting inits end use.

A wide variety of technologies have been and arebeing developed as man attempts to exploit the solarresource to meet his energy needs. For ease of discus-sion these applications can be divided into three catego-ries: space and water heating, solar-thermal powergeneration, and direct conversion to electricity (photo-voltaics).

2. SOLAR SPACE AND WATER HEATING SYSTEMS

A. PASSIVE SYSTEMS

The benefits of passive solar design are only nowbeing appreciated in this country, but such design offersa great potential for reducing conventional energy con-sumption in Canadian homes and buildings.

A passive solar space heating system is one inwhich the structural and architectural elements (walls,floors, windows) of a building are used to collect, storeand distribute part of the thermal energy needed tomeet the structure's heating requirements. In a purelypassive system there are no fans, pumps or othermechanical devices needed to distribute the thermalenergy as it moves by natural means (conduction, con-vection and radiation). Passive solar heating systemscan be divided into three main types: direct gain, indi-rect gain and isolated gain (Figure 6-28).

In addition to the passive solar design featuresaimed at maximizing solar collection (increased south-facing windows) and storage (additions of thermal mass)noted in Rgure 6-28, there is a third integral part topassive solar design which involves energy conservationor the reduction of heat loss. To maximize the contribu-tion of passive solar gain to a building's heat require-ments the building must be energy-efficient. Passivesolar and energy-efficient design are thus inseparable. Adetailed account of potentials and problems associatedwith these two concepts is presented in the section onConservation as an Energy Source.

Information and education are essential elements inbringing about increased demand for passive solar andenergy-conserving houses and buildings. Many peopleare not aware that passive solar and energy-conservingdesigns are already cost-effective in some applicationsat today's energy prices. The economics of this com-bined approach to energy saving can only improve asthe Drice of oil continues to rise. The program of publicinformation on energy conservation which the Depart-ment of Energy, Mines and Resources has in place hasbeen highly successful and has served as a model forsimilar programs in other countries. This effort should beexpanded making sure that new publications keepup-to-date with developments in the field.

CONCLUSIONPassive solar space heating coupled with ener-gy-efficient design and construction has a greatdeal of potential to reduce energy demand forspace heating in Canada. Information on pas-sive solar design is a natural companion to theconservation message which the Governmenthas been carrying to the public.

RECOMMENDATIONThe Federal Government should extend itspublic education program on conservation toinclude information on passive solar energy andenergy-efficient building practices.

B. ACTIVE SYSTEMS

Active solar systems differ from passive systems inthat heat is transferred through the system in a regulat-ed way by pumps or fans. In addition, a heat storagedevice other than the building mass is used. An activesolar heating system is therefore composed of the fol-lowing components: a solar collector whose function isto gather the sun's energy; a circulating loop withpumps and pipes to carry the heat from the collector tothe house; a heat storage reservoir of some kind toassure that the heat can be distributed evenly during theday; and a thermostatic control system to distribute theheat when and where required. Depending on the

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SOURCES, CURRENCIES AND TECHNOLOGIES

Passive Solar Heating

Direct gain is the most commonly used formof passive solar system. It utilizes the sunlightentering a building directly through the windowsand careful design can maximize the heat gaineddirectly in this way. South-facing windows admitthe most solar radiation (in the northern hemis-phere), consequently passive solar buildings aredesigned with the largest window area facingsouth. An overhanging roof on this side admitssunlight in the winter when the sun is low in thesky, and blocks out unwanted solar radiation insummer when the sun is high. Since the solarradiation is both collected and stored within theliving space, adequate thermal mass (heat storagecapacity) must be provided in the interior of thebuilding to minimize temperature fluctuations —heat absorbed during the day is available at nightto warm the building. The required thermal mass

Figure 6-28: APPROACHES TO PASSIVE SOLARHEATING

b) Indirect Gain:Thermal StorageWall

(c) Isolated GainSunspace

LegendRadiationConductionConvection

Source: After Anderson and Riordan, 1976. p. 14, 121,234.

can take such forms as concrete floors or walls,masonry biock walls, slate floors, stone fireplacescr double layers of drywall. Any of these featuresbuilt into a house will act as a storage unit for thesolar system and the distinguishing feature of all ofthese passive solar components is that they arean integral part of the building itself.

In systems employing indirect gain, a heatabsorbing material is placed directly behind thewindows in the path of the sunlight. Such a ther-mal storage wall can be made of concrete, stone,brick or containers of water, and vents at the topand bottom of the wall allow the convective circu-lation of warm air into the room. The wall absorbsheat during the day and radiates warmth at night.

The third method of using passive solarenergy for space heating is through isolated gain.In this system a structure is built onto a house tocapture solar energy and the captured heat circu-lates through the living space by convection. Themost common example of such a structure is asolar greenhouse, which often uses water drumsas the heat storage medium. This method of utiliz-ing passive solar heating is most suitable forretrofit onto existing buildings.

213

system, other elements (such as heat exchanger, expan-sion chamber, draining mechanism) may be required.

The most important of the above elements are thecollector and the storage system. These elements aredescribed in the following paragraphs.

A solar collector consists of a black-coloured platewhich is heated up when exposed to solar radiation. Theheat is extracted from the plate by cooling it with a fluidwhich circulates in a network of tubing bonded to theplate. In order to avoid loss of some of the heat to thea<r, the plate is isolated from it. First, the plate iscontained in a well-insulated box to prevent heat losses.Second, it is covered by one or two transparent coverswhich will stop heat losses due to natural convection.The glass or plastic cover allows "visible" solar radiationto enter but prevents long-wave radiation (heat) fromescaping, creating a greenhouse effect. This is the gen-eral principle of a solar collector. Many variants havebeen designed to improve performance and cost: eva-cuated-tube collectors, thermc-pane collectors, concen-trators, plastic collectors, and so on. Absorber plateshave been built out of aluminum, copper, steel andplastic; covers using special glass have also been tried.Three of the variants are shown in Figure 6-29.

The cost of evacuated tubes is presently greaterthan that of the more commonly used flat-plate collec-tors but the excellent insulation afforded by the vacuumpreserves their operating, efficiency in cold weather andpartially offsets their added cost. These collectors seemwell suited to Canadian climatic conditions but someproblems have been encountered. They lose so littleheat that snow can accumulate on them, greatly reduc-ing their efficiency. Concentrating collectors are used inapplications where higher temperatures are required.

The other important component of an active solarsystem is the heat storage element. One of the disad-vantages in using active solar heating in northern cli-mates or in cloudy areas is the lack of sufficient sunlightto allow the system to handle the full heating load. Thus,where daily insolation in winter may not be sufficient tomeet heating needs or where rain and fog can persist fordays on end, a storage system becomes necessary.

Conventional heat storage systems using insulatedcontainers of water, rocks or other materials are verybulky and gradually lose their heat to their surroundings.In order to reduce the heat losses normally encounteredin small heat reservoirs, it has been suggested that hugevolumes of heated water be stored underground in aconfined aquifer isolated from the surface by a thick,naturally-occurring layer of impermeable clay. The ideais to withdraw many millions of gallons of water from theaquifer during the summer, pass it through solar waterheaters and reinject the heated water into the aquiferthrough a second well. The hot water would then be

Figure 6-29: THE THREE PRINCIPAL TYPES OFSOLAR COLLECTORS

FLAT-PLATE SOLAR COLLECTOR (1>INSOLATION(SUNLIGHT)

TRANSPARENTCOVER PLA

ABSORBINGSURFACE

HOTWATER

INSULATION

'WATER

PARABOLIC-TROUGH CONCENTRATOR < 1 )

S H I E L D ^ ;

STAY RODS / C ^ U

COLLECTORyruBE

7/CHAIN DRIVE

/

EVACUATED-TUBE COLLECTOR <2)

DELIVERY TUBEABSORBER TUBECOVER TUBE

SPRING SUPPORT

Source: (1) After Williams, 1977, p. 10.16.(2) Solartech Ltd.. undated, p. 2.

pumped back up during the winter to heat a wholehousing development. Such a storage system has beensuccessfully tested in the U.S. and Europe where heatrecapture as high as 75% has been achieved.

Chemical heat storage using hygroscopic mineralsor salts can also overcome the problems encounteredwith small-scale water or rock storage systems. Whendry, these substances store energy indefinitely in theform of a chemical potential and, when moistened, theygive up heat in an exothermic or heat-releasing reaction.

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SOURCES, CURRENCIES AND TECHNOLOGIES

Moreover, hygroscopic materials can be used indefinite-ly without deterioration. When solar radiation is inade-quate to meet heating requirements, thermal energy canbe released from the chemical storage system. Whensunlight is freely available, the chemical storage systemcan be dehydrated or "recharged".

Systems using hygroscopic compounds for heatstorage are under development in Sweden and Canada,and a Swedish experimental system has been in opera-tion since November 1979 meeting all the heating needsof a five-room house with no backup systems whatso-ever. The hygroscopic salt used is sodium sulphide(NaS2). Eight separate storage tanks of the material aresituated in the basement and solar heat is derived from40 square metres of solar panels on the roof. Thesodium salt has a very high energy density comparedwith conventional heat storage media such as water orrocks. Eight tons of the dry salt can store and deliver8,000 kWh of heat — enough to meet the space andwater heating needs of a small, well-insulated houseeven allowing for the storage of up to half the year'scollected energy for winter use. An attractive and novelfeature of the Swedish "Tepidus" system is its combina-tion with a ground-source heat pump to minimize therequirement for conventional energy in domesticheating.

Canadian research in chemical storage has centredon the hygroscopic mineral zeolite, a naturally occurringmineral available as a mined product. Artificial zeolitesare also on the market and are presently used as gasadsorbents, drying agents and water softeners.Researchers have suggested that a typical solar housewould need only 1 to 4.6 cubic metres of zeolite to meetall of its heat storage requirements and that airtight,moisture-proof bins of this material might cost as little as$0.37 per kilogram by 1982. Unlike the Swedish systemwhich uses flat-plate collectors, a zeolite storage systemrequires a higher operating temperature and must becoupled with evacuated-tube or concentrating solar col-lectors. Zeolite storage systems were investigated atCarleton University and researchers there envisage bothindustrial and domestic applications for the system.They see the greater potential in domestic settings,however, by using heat pumps in combination withzeolite-based storage, or by charging the system withheat derived from off-peak electric power or from indus-trial sources.

CONCLUSIONThe Committee believes that chemical andlarge-scale thermal heat storage systemsshould have a high priority in solar research anddevelopment in this country. Such systems

seem to offer a means of overcoming one ofthe major impediments to the widespreadapplication of active solar heating, namely themismatch between the availability of andrequirement for solar energy.

RECOMMENDATIONResearch should be aimed at reducing the costand establishing the reliability and durability ofthermal storage components in active solarsystems.

RECOMMENDATIONThe funding level for RD&O in chemical andlarge-scale thermal heat storage must beincreased substantially and steps must betaken to assist in the commercialization of thesystems developed.

There is also considerable opportunity for exportingsuch technology once it is established. Canadian solarequipment manufacturers have noted that overseas cus-tomers regard the Canadian climate with its wide rangeof temperatures as a good test of the ruggedness ofsolar systems. Thus if our manufacturers can develop asystem which is capable of meeting the space heatingrequirements of a Canadian home, they should be in agood position to develop export markets as well. Fur-thermore, these storage systems should not be limitedto solar applications. Many other renewable energysources are also intermittent in nature and effectivestorage of the energy which they do provide will increasetheir potential for contributing to our energy supply. If azeolite storage system also permits economical storageof off-peak electricity and aids in waste heat recovery,then the payoffs from developing such a system will begreat indeed.

Unlike space heating systems using chemical heatstorage, solar domestic hot water systems utilize the hotwater tank (or an auxiliary, pre-heat water tank) forstorage. Domestic hot water heating is a solar technolo-gy (along with swimming pool heaters) which is alreadycompetitive in certain parts of Canada, particularly inthe Maritime Provinces where electricity costs are thehighest in the country. Figure 6-30 shows a solar domes-tic water heating system.

Economics represents a major barrier to the wide-spread use of active space-heating systems. The rela-tively low cost of conventional fuels and the high front-end costs of active solar systems are holding back thedevelopment of a solar market in Canada. Furthermore,the need for building standards to promote passive solardesign is paralleled by the need for durability and relia-

215

bility standards for active systems. However, a carefulbalance is required in which standards must be devel-oped to instill consumer confidence in solar equipmentbut not to the extent that those standards stifle improve-ments in design. The National Research Council isalready working with the solar industry on the establish-ment of standards for solar systems and the Committeebelieves that this effort should proceed as quickly aspossible.

Figure 6-30: A DOMESTIC SOLAR WATERHEATING SYSTEM

COLLECTOR

A number of witnesses suggested that the solarmarket in Canada will not develop until financial incen-tives are offered to consumers, to offset the economicbarriers already noted. To date, incentives have beenaimed primarily at establishing solar equipment manu-facturers so that reliable, tested equipment will be avail-able when the market develops. The best known ofthese programs are PASEM and PUSH.

PASEM (Program of Assistance to Solar EquipmentManufacturers) was set up to encourage the early estab-

lishment of a viable Canadian solar industry through aseries of cost-sharing agreements. A national competi-tion was held among solar equipment manufacturers,and ten companies were chosen to participate inshared-cost contracts with the Federal Government toproduce solar heating systems and components and toestablish production and marketing capabilities. A totalinvestment of $3.9 million has been made, of which theFederal Government's share has been $3.6 million.

The other aspect of fostering the growth of a solarindustry is market development and, therefore, the Fed-eral Government set up the PUSH program (Purchaseand Use of Solar Heating). In this program the Govern-ment itself became the initial market for solar heatingequipment and is slated to buy $125 million worth ofhardware by 1984. The program experienced difficultiesin the federal bureaucracy which led to delays in ordersbeing placed.

Despite the delays, however, projects worth over$10 million had been proposed, designed or were underconstruction in 1980 and more have been approved for1981. There are installations in every province, on PostOffices, federal administrative buildings, conference cen-tres, schools, airport buildings, correctional centres andrecreational complexes. Also under the auspices ofPUSH, the Department of Public Works (which adminis-ters both PASEM and PUSH) has chosen nine buildingsto be fitted with complete solar systems by firms whichwere awarded contracts under PASEM. PUSH fundshave been approved for up to $100,000 per project.

In another effort to demonstrate the use of solarenergy, the installation of solar systems for hot waterheating has been approved for 75 federal buildings. Allof these systems are to be complete, ready-to-installpackages, which are more attractive to the generalpublic than custom-built systems (which are viewed as"experimental" rather than "operational"), and it ishoped that such demonstrations will develop packagessuitable and acceptable for widespread domestic use.

These programs appear to be having their desiredeffect, but the major criticism which has been levelled atthe plan is that the Federal Government has been virtu-ally the only customer. With no concurrent market de-velopment in the private sector, the companies whichhave expanded under these initiatives face the prospectof bankruptcy when the program ends in 1984. Clearlyincentives to the consumer would help establish a pri-vate sector demand, but a certain amount of cautionshould be used in this regard. In the United States, earlyincentives led some consumers to buy equipment whichwas not weft-designed or tested. This experience withequipment which came onto the market too quicklythrough the pull of increased demand has not beengood for the solar industry's reputation.

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SOURCES, CURRENCIES AND TECHNOLOGIES

RECOMMENDATIONConsumer incentives for active solar systemsshould be put in place only when standardshave been developed and warranties can beoffered.

A second criticism of PUSH and PASEM is thatmost of the installations have been large. This, ofcourse, arises from the nature of the facilities underfederal jurisdiction. It does not seem prudent, however,to expect the solar industry to begin its developmentwith only large, complex commercial systems, as theirfailure to operate as designed may well be expectedgiven the present stage of development of the industry.Those involved in industrial development should not findthis hard to comprehend, but the public perception ofsuch difficulties may work against the introduction ofdomestic solar systems. A demonstration program fea-turing domestic solar space heating systems thus shouldbe an essential part of any solar strategy. The NationalResearch Council has such a program already in which avariety of space heating systems are being tested, butthe results of testing deserve to be better publicizedthan in the past. Additional demonstrations should beundertaken by the Federal Government as solar systemsevolve and the results of these tests need to be widelypublicized. The 1980 National Energy Programannounced such a demonstration for solar domestic hotwater heating with 1,000 units to be installed in homesacross Canada. Of course, some thought will have to begiven to the timing of such programs to ensure that bothtrained individuals and equipment are available whenrequired.

RECOMMENDATIONThe Committee welcomes the recentannouncement of a large-scale demonstrationprogram for solar domestic hot water heatingsystems and recommends a similar program foractive solar space heating systems. This pro-gram should incorporate a range of storagesystems including zeolite and sodium sulphide.

Experience gained in the solar water heatingdemonstration program will obviously be useful in imple-menting this recommendation.

3. SOLAR-THERMAL POWER SYSTEMS

Solar-thermal power systems first convert solarenergy into heat and subsequently change the thermalenergy into mechanical energy by means of a turbine.The output from the turbine then generates electricity.

Two technologies currently exist for collecting, con-centrating and converting solar energy. They are known

as the central receiver system and the distributed collec-tor system. The central receiver system consists of alarge field of sun-tracking mirrors (heliostats) whichintercept and redirect incoming solar radiation to asingle large receiver mounted on top of a tower. Thisconfiguration is sometimes referred to as a "powertower". The redirected radiation i seats a circulatingworking fluid in the receiver. A number of working fluidsare being examined including high-pressure water,superheated steam, oils, molten salts and liquid metals.The choice of working fluid depends in part on thesystem's operating temperature. The United States, forexample, intends to develop receivers which will operateat about 925°C (1.700°F) by the early 1980s and at1,100°C (2.000-F) by 1985.

The distributed collector system does not focus thesunlight on a central receiver but instead converts thesunlight to heat at the individual collector module. Eachcollector module consists of a cylindrical mirror surfacewhich redirects the solar radiation onto the receiver/absorber unit at the focus of the mirror. In this design,the working fluid circulates through the collector where itis first heated, then pumped through a pipe network to aboiler or heat exchanger. From this point on, the centralreceiver and the distributed collector systems are identi-cal (Figure 6-31).

As in conventional power generation technologies,cooling towers or condensers are used to remove andreject waste heat. A thermal storage unit also forms partof the system to make use of sunlight which is in excessof immediate needs. Various storage media includingrocks, oil and salts are being considered. No researchand development is being done on solar-thermal powersystems in Canada.

CONCLUSIONThe Committee believes that Canada shouldnot pursue an RD&D program in solar-thermalpower systems since they offer less promisethan other solar technologies in this country forboth the short and long term.

4. PHOTOVOLTAICS

A solar, or photovoltaic, cell produces electricitydirectly when exposed to the sun's rays. It has nomoving parts, consumes no fuel, produces no pollutionduring operation and can be made out of one of themost abundant elements on Earth — silicon.

The technology for manufacturing solar cells isalready well developed. It was established in the early1960s in the U.S. space program for satellites requiringa source of electrical power which could operate reliablyfor long periods of time. Nevertheless, while the space

217

program provided the impetus for development of solarcell technology, it also inadvertently created a majorbarrier to the widespread use of such cells. In the spaceprogram the only feature required of this technology wasefficiency. Research thus concentrated on delivering themost watts per cell, regardless of the expense involved.High costs have since been a major impediment to thistechnology penetrating other markets.

but they are also much less costly. It may well provecheaper to use more of these less expensive solar cellsto produce a given amount of electricity than fewerexpensive but highly efficient ones. Work is also under-way on extending this thin-film concept to less expen-sive materials such as cadmium, cuprous sulphate, andindium and tin oxide. Other research is being directed atdeveloping more expensive solar cells (such as gallium

Figure 6-31: SOLAR-THERMAL POWER SYSTEM CONFIGURATIONS

A- CENTRAL RECEIVER SYSTEM("POWER TOWER")

Incident Insolation

Electrical TransmissionNetwork

Incident Insolation ReflectedInsolation

B- DISTRIBUTED COLLECTOR SYSTEM

Source: After United States, Department of Energy, 1978, p. 5.

The expense evolves from the need to use extreme-ly pure and perfectly formed silicon crystals. The con-ventional way to make photovoltaic cells is to pull asingle, pure crystal of silicon from a melt, slice it into thinwafers with a diamond saw and "dope" it with impuritiesin a high-temperature furnace. This process is veryenergy intensive and expensive; thus much research isconcentrating on reducing the cost of photovoltaic cells.

Canada is investigating the use of thin films ofinexpensive grades of silicon (such as amorphous sili-con) formed at low temperatures. These cells are onlyabout one-half as efficient as pure silicon crystal cells

arsenide) which have the ability to operate at very hightemperatures. Such a cell could be placed at the focalpoint of a group of concentrating mirrors, like that atopa solar power tower (silicon cells would fuse in thishigh-temperature environment).

Photovoltaic cells still remain too expensive to com-pete with conventionally-generated electricity in areaswith an electrical grid. In places far from central generat-ing facilities, however, photovoltaic systems can com-pete with other energy sources. Important areas forearly application of photovoltaic systems include marine

218

SOURCES. CURRENCIES AND TECHNOLOGIES

The Design and Operation of a PhotovoltaicCell

When sunlight falls on a silicon crystal, itknocks an electron out of its fixed position in thecrystal structure. Negatively charged electronsthus freed to move produce a current, but undernormal circumstances they quickly fall back intothe positively charged "holes" they have vacated.

In order to get useful work from a solar cell,an electrical barrier must be set up which stopsthe free electrons from simply dropping into thenearest hole. The barrier separates the electronsand holes (negative and positive charges) anddrives them in different directions. It is created byadding minute quantities of impurities to the sili-con, making it a semiconductor. If phosphorus, forexample, is added, an excess of electrons overholes is created and one has an "n-type" semi-conductor in which some electrons remain free tomove. But, to have an electrical current, a positivecharge is also required; thus an element like boronis added to another silicon crystal, creating addi-tional holes or a positively charged "p-type" semi-conductor. In a solar cell an n-type and a p-typesemiconductor are joined together and their outerfaces connected by an electrical wire, as illustrat-ed in below.

Figure 6-32: SCHEMATIC DRAWING OF APHOTOVOLTAIC CELL

Photon of light;

/* Hectric current

Contact

i ? i ü C^lrSs^-"-!. ••'-:>.- '6'-' -'"- /-.:•->-'.-•'..•'";

Load<

Contact

Key: • electronso holes

Source: After "The Sun on a Semiconductor", 1978,p. 23.

When a photovoltaic cell is exposed to sun-light, the electrons knocked ioose do not fall intoholes but instead follow the line of least resistanceout of the n-type layer and through the externalcircuit to re-enter the p-type layer. This flow ofelectrons constitutes an electrical current and theflow continues as long as sunlight falls on thecell.

and air navigational aids (fixed-site hazard/warninglights, buoys) and environmental monitors and sensors.Thereafter, domestic markets will be developed for tele-communications applications, outdoor lighting and thereplacement of small diesel/gas generators in remoteareas. The development of a sufficiently large market tomake mass production feasible will hopefully reduce thecost of solar cells.

In an evolving electricity/hydrogen economy, elec-tricity generated directly from sunlight may becomeincreasingly important in replacing electricity from othersources. As R&D continues over the next few years thepotential for photovoltaic electricity production inCanada will become better established. Certainly forenvironmental reasons it is a preferred method for thegeneration of electricity.

If Canadian industry can develop these systems, asubstantial Third World export market exists as photo-voltaics can be used for running water pumps, for com-munications facilities and for supplying electricity tosmall villages. With a view to developing an industrycapable of producing low-cost photovoltaic devices, theFederal Government is presently funding RD&D at$600,000 under the NRC's solar program, and at$250,000 for university research through the NationalScientific and Engineering Research Council. A further$200,000 is assigned to applicable laboratory work atNRC and $100,000 is earmarked for joint federal/pro-vincial programs. The NRC has proposed a five-yearRD&D program, with funding increasing yearly from thepresent level of just over $1 million, to over $4 million by1984-85.

CONCLUSIONIt is essential that the most promising photovol-taic systems developed during the RD&D pro-gram be commercialized as early as possible.Only then will Canada be able to capture part ofthe export market and develop a viable domes-tic industry.

RECOMMENDATIONIn light of both the domestic and export poten-tial for photovoltaic systems, the Committeerecommends that Canada's RD&D efforts inphotovottaics be accelerated beyond the levelscurrently planned.

5. SOLAR ENERGY: AN APPROPRIATETECHNOLOGY

The term "appropriate technology" has come intouse in recent years in discussions of technology transfer

219

to Third World countries. Technical devices which aresmall-scale, comparatively simple to build and maintain,and which can be built and operated by local peopleusing local materials are described as being "appropri-ate" for use in the Third World.

The Brace Research Institute, an affiliate of McGillUniversity in Montreal, is a world leader in the develop-ment and introduction of a number of solar and otheralternative energy devices which meet the above criteria.This Committee had the pleasure of visiting the Instituteduring its Canadian travel.

The Brace Institute has spent many years develop-ing solar stills, solar domestic hot-water systems, solardryers and solar cookers. Many of their designs are inuse throughout the world. Designs are kept as simple asfeasible and, to the greatest extent possible, the availa-

condenses, runs down the inside of the transparentcover and is collected at the edges of the container. Inmany regions of the world such a system can be used toprovide potable water where the local supply is con-taminated by high salt concentrations, or by paniculatematter. The unit is simple to construct and has nomoving parts, so that there is a minimal requirement formaintenance.

Solar cookers and dryers are available which incor-porate the same ideas of simplicity of design and con-struction with functional utility. In many Third Worldcountries, these simple devices allow rural people tocook their food and dry their crops without purchasingany fuel. To these people this represents a significantsaving. In many parts of Africa, for example, woodwhich is the traditional cooking fuel is becoming increas-

Figure 6-33: A SIMPLE SOLAR STILL

TRANSPARENT COVEREVAPORATION

Source: After Brace Research Institute, 1979.

bility of local materials is taken into account whensystems are developed. Solar stills provide a goodexample of such technology. A solar still (Figure 6-33)consists of a shallow flat-bottomed container with acurved, V-shaped or inclined transparent cover. Thesunlight passes through the cover and heats the saltwater in the container. The water evaporates, leavingths salt behind. When the water vapour hits the cover it

ingly hard to come by. Deforestation is an extremelyserious problem so any technology which can replacefuel wood can make a significant contribution to thewell-being of people who now rely on this energy supply.Clearly solar energy has a major role to play in suchsituations and the Committee would like to see the workof the Brace Research Institute and other similarendeavours encouraged to the greatest possible extent.

220

ground cover and topography are dominant in determin-ing these two characteristics but above this level, varia-tions in the wind are the result of horizontal changes intemperature and pressure.

2. ADVANTAGES AND DIFFICULTIES IN USINGWIND ENERGY

The wind has a number of characteristics whichmake it an attractive energy source. Like solar radiationit is a free, inexhaustible energy source available every-where. In Canada we are fortunate in that the areas withthe highest average annual wind speed happen to coin-cide with areas in which conventional energy sourcesare scarce, such as the Maritimes, Northern Ontario andcoastal British Columbia. A windmill delivers high-grademechanical power which can efficiently be convertedinto electricity (with no intermediate thermal conversionstage), so even small windmills (5 kilowatts for example)can feed directly into an electrical grid. In areas wherecapital is scarce and/or energy demand grows slowly,wind power allows supply increments on a smaller scalethan is the case with most conventional generating units.The Maritime Provinces are a region where these prop-erties of wind energy systems may prove especiallyattractive in the near future.

On the negative side the diffuse and variable natureof wind contributes to the high capital costs associatedwith its exploitation — large, expensive conversion sys-tems are required to capture a significant amount ofenergy. For example, the 3.8 MW wind turbine to bebuilt by NRC and Hydro Quebec will stand taller thanthe Peace Tower. The variable nature of wind alsomeans that wind systems cannot provide an uninterrupt-ed energy supply. There are means of overcoming thisdifficulty by using wind energy in systems where it is notthe sole source of electricity or by providing storagefacilities, but both add significantly to the cost. Windturbines can interfere with electromagnetic signals(radar, television and microwave communications), andcan generate noise and visual (aesthetic) pollution.These characteristics may pose problems in the future,particularly if one is considering widespread use of thisenergy source.

3. INTERNATIONAL AND CANADIAN DEVELOP-MENT

Research and development of wind energy tech-nology in Canada is directed by the National ResearchCouncil. The Canadian program concentrates exclusive-ly on the vertical axis wind turbine (VAWT). while mostother countries have invested in the development ofhorizontal axis wind turbines (HAWT). Rgure 6-34schematically represents these two types of wind tur-bine. The VAWT is preferred in this country because it is

more efficient, extracting more power at a given windspeed than a HAWT. VAWTs have a simpler configura-tion and operate at a higher speed than other windturbines, which makes them well suited to electricalgeneration (as opposed to providing mechanical energyfor pumping water). They also offer the advantage ofbeing omnidirectional; that is, they can operate in allwind directions and therefore do not require equipmentto move them to face the wind as do horizontal axisturbines. A further practical advantage of vertical axiswind turbines is that their configuration allows most ofthe machinery which the turbine drives to be located atground level. This simplifies repair and maintenanceprocedures.

Figure 6-34: WIND TURBINE CONFIGURATIONS

747 to scale

400

300

200 £

I

100

(a) VERTICAL AXIS WIND TURBINE(NRC. Project Aeolus)

(b) HORIZONTAL AXIS WINDTURBINE

(Boeing. Washington State)

Source: After Chappell, 1980. 2A:20.

Due to its early entry into the field of VAWTsCanada has a world lead in this technology. Othercountries which in the past have concentrated onHAWTs are beginning to realize the advantages of thevertical axis configuration and the United States in par-ticular is putting substantial amounts of money into thedevelopment of vertical axis systems.

CONCLUSION

Unless Canada moves quickly into the commer-cialization and marketing of its vertical axissystem, the early advantage which this countryholds will be lost

222

SOURCES. CURRENCIES AND TECHNOLOGIES

The current research efforts of the NRC can beusefully discussed under three headings: resourceassessment, small to medium size windmills, and largewindmills.

The first area of research involves assessing thewind energy resource in Canada. The Atmospheric Envi-ronment Service (AES) of the Department of Environ-ment has done much of the work in this area to date,using archival material to derive a standard set of datafor the purpose of identifying areas vhic.i deservedetailed evr'uation. Ttv NRC has established a set oftechnical specification» ror wind speed monitoringequipment to promote the development of standardtesting procedures. In addition, the NRC is working withprovincial utilities on detailed evaluations of a number ofpromising sites across Canada which were identified inthe AES study. Canada is also taking part in an interna-tional evaluation of computer models for wind energysiting under the auspices of the International EnergyAgency's Program of Research and Development onWind Energy Conversion Systems.

The small and medium sized wind turbines whichNRC has examined are being developed with three

, distinct applications in mind. The first is special purposeapplications in which turbines of 1 kW (DC) provideon-demand power at a remote site. Storage is requiredin these applications as the wind system is the solepower source. These units are expensive as they mustmeet very rigid demands for reliability and the provisionof storage capacity adds to the total cost. Such systemsare designed primarily to power remote communicationsnetworks and navigational aids, where high costs canbe justified. Six installations of this type are nowbeing made across Canada. Five of them — in Alberta,Saskatchewan, Ontario, New Brunswick and New-foundland — will supply energy for telecommunicationsnetworks. The sixth installation will provide cathodicprotection for an oil pipeline in Alberta.

The second area of application is in small- andmedium- sized wind energy systems which can be usedfor electrical generation in remote communities. Manysettlements in Canada depend entirely on diesel genera-tion for their electricity. The NRC has been working on awind/diesel hybrid system with the Ontario governmentand a 10 kW(AC) VAWT has been coupled with a dieselgenerator at an experimental test site on Toronto Island.Two years of operation have demonstrated that signifi-cant savings in diesel fuel can be achieved on a site withan average wind speed in excess of 13 mph (21 km/h)and at a diesel fuel cost greater than $1.00/gallon.Many northern communities satisfy both of these condi-tions and the NRC, the Ontario Ministry of Energy andOntario Hydro are arranging to finance the installation ofa 50 kW VAWT wind/diesel hybrid system in Sudbury,Ontario.

Medium-sized turbines (around 50 kW in output) arealso being tested while linked into electrical grids. Four50 kW units with no storage are already installed andcoupled to major grids, one each in British Columbia,Saskatchewan, Manitoba and Newfoundland. Thesesystems are the forerunners of larger wind turbines andare being monitored to determine what problems mayarise from feeding the variable wind-generated electricityinto an electrical grid which has traditionally relied onsteady energy inputs from large facilities.

Concerning large windmills, the NRC and HydroQuebec in a joint project have constructed a 230 kWVAWT on the Magdalen Islands. The machine was firsterected in 1977 and early tests showed that this versionof the VAWT performed as expected. Unfortunately, aprocedural error in the operation of the machine led toits destruction in July 1978. An identical machine waserected on the same site in January 1980 and subse-quent testing has shown this wind turbine to perform asexpected, reaching full power operation ahead ofschedule. The original plans called for the operation ofthe facility to be turned over completely to HydroQuebec at the end of 1980 with the installation generat-ing a part of the electricity supply for the MagdalenIslands. Hydro Quebec and the NRC agreed, however,that the instrumentation collecting operational datashould remain in place so that experiments can continue

"while the wind turbine is contributing power to theIslands' grid.

Following the success of the Magdalen Islandsexperiments, scientists at the NRC proposed the con-struction of a megawatt-size VAWT, seeing this as thenext logical step in the wind energy program. Running avertical axis wind machine of this size would giveCanada unique operating experience and consolidate itsposition as a world leader in vertical axis wind turbineresearch and development. "Project Aeolus" involvesthe design and construction of a VAWT which cangenerate up to 3.8 megawatts of electricity (enoughelectricity to supply the non-heating requirements of600-700 homes) and which is expected to cost $23million to complete. It is believed that such a systemcould operate at sites with average wind speeds ofapproximately 30 mph (48 km/h) and deliver energywhich is cost competitive with conventional electricity.Hydro Quebec has agreed to participate in this programon a cost-shared basis with the Federal Government andthe wind turbine will be erected at a suitable site ineastern Quebec with operation expected in 1983.

The market for wind turbines in Canada may notprove to be large, given other options available to us forthe production of electricity. However, in certain regionsof the country such large-scale wind conversion systemscould be very important in replacing fossil fuels currentlyused for electrical generation. In addition to the domes-

223

tic market, a large export market seems likely to developin both industrialized and Third World countries.

CONCLUSIONThe Committee agrees that Canada shouldpursue the development and commercializationof megawatt-scale vertical axis wind turbinesand welcomes the recent announcement that"Project Aeolus" has been approved forfunding.

In its visit to the Yukon and the Northwest Territo-ries, the Committee was struck :by the vulnerability ofnorthern communities depending solely upon diesel gen-eration for their electricity. We thus recognize the uncer-tainty which many Canadians feel about the supply andprice of petroleum products in isolated regions of thecountry. :

: "~

CONCLUSIONThe Federal Government should quickly insti-tute measures to assist remote communities in

diversifying their energy supplies. In this con-nection, wind energy and small-scale hydro aretwo options meriting close consideration. Sucha program would complement the energy con-servation efforts of northern communities andthe off-oil philosophy as outlined in the NationalEnergy Program. In the case of wind energy, anassistance program Would aid in establishing awind turbine manufacturing capability inCanada by providing an immediate market.

RECOMMENDATIONFunding and technical assistance for installingwind/diesel hybrid systems should be providedto remote communities, with appropriate windcharacteristics, now relying on diesel fuel forelectrical generation. This assistance would notonly help such communities reduce their needfor petroleum but would also create an immedi-ate market for wind turbines and hasten thecommercialization of this technology.

224

Recommendations

I he following recommendations are listed in the order in which they appear in the text, not in order of importance.

The page on which each recommendation appears in the Report is listed so that the reader can easily determine thecontext in which it is made.

RD&D (1 ) in its own best interest and in the interest of furthering the objectives of the IEA,Canada should accelerate the rate of increase in its alternative energy RD&Dexpenditures.(P. 68)

Ministry (2) The Committee recommends that a Ministry of State for Alternative Energy andof Conservation be created under the Ministry of Energy, Mines and Resources. WeState further recommend that this new Ministry be divided into four sections respon-

sible for Conservation, Solar Energy, Methanol, and Other Alternatives.(P. 79)

Canertech (3 ) The Committee recommends that the new alternative energy corporation, Caner-tech, report to the proposed Minister of State for Alternative Energy and Conser-vation at the time that it becomes an independent Crown corporation.(P. 79)

Energy (4) The Committee recommends that the Department of Energy, Mines andEconomies Resources initiate a comprehensive study of energy and the economy to clarify

this important relationship in the Canadian context and to provide guidance informulating energy policy and more general economic policy.(P-83)

Conservation (5) The Committee recommends that a detailed study into all aspects of energyconservation, hi all sectors of the economy, be undertaken immediately,(p. 118)

Conservation— (6) All levels of government should cooperate in ensuring that architects, buildersPassive Solar and contractors learn and practice energy-efficient design and construction. In

particular, these people should be made aware of the energy-saving benefitswhich result from the passive use of solar energy.(p. 119)

(7) The Committee urges that Federally-financed housing incorporate energy-con-serving and passive solar design in order to demonstrate its benefits.(P. 120)

Conservation (8) Energy performance standards for buildings should be incorporated in the Nation-at Building Code so that conservation and innovative design and construction arepromoted,(p. 121)

227

Conservation (9) Standard tests for the energy performance of buildings should be established bythe Federal Government so that energy-efficiency ratings can be assigned,(p. 121)

(10) The Committee recommends that the Federal Government establish a standardprocedure for testing the airUghtness of buildings.The Committee further recom-mends that, once established, the test be applied to Federal buildings and to allnew homes financed through the Canada Mortgage and Housing Corporation.(P. 121)

(11) Lighting regimes in businesses and homes should be designed to ensure thatelectric energy is not wasted.(p. 121)

(12) Underground construction should be encouraged in appropriate circumstances asan energy-conserving building technology.(p. 122)

Ethanol (13) The Committee recommends that the Federal Government, through Canertech,encourage the research, development and commercialization of cellufose-to-ethanol technology.(p. 127)

(14) Ethanol should be used as a gasoline extender only and not as a substitutetransportation fuel in pure form, except perhaps on farms.(P. 127)

(15) The Committee recommends that the Government ensure, in its amendments tothe Excise Act, that production of ethanol in excess of individual requirementsmay be sold to retail suppliers of alcohol fuel or gasohol.(P. 128)

(16) The Committee does not endorse pure ethanol from starch or sugar feedstocksas a major alternative liquid transportation fuel for Canada. It does, however,recommend that fuel ethanol be permitted for personal use or for the productionof gasohol.(P. 128)

Methanol (17) The Committee recommends that the construction of a hybrid natural gas/biomas8 methanol plant be encouraged to demonstrate this technology ofmethanol production as soon as possible,(P. 129)

(18) Since hybrid natural gas/biomass methanol plants are a transitional step inestablishing a fuel methanol industry, the Committee further recommends thatsuch plants be converted when feasible to operation using blomass alone orbiomass spiked with electrolytic hydrogen.(P-129)

(19) (n the short term, Canada should allow fuel methanol to be sold at prices lowerthan gasoline in order to make it attractive as an alternative transportation fuel.(P-130)

(20) The Committe

228

commends that the technology of anaerobic digestion shouldbe actively pursued in Canada and that additional biogas reactors should beinstalled to demonstrate their effectiveness in the Canadian environment.(P. 131)

RECOMMENDATIONS

Densification(21) As the technology for biorans densification is available now and is being used in

some locations, the Committee recommends that development of the wooddensification Industry should be encouraged in Canada. This means thatincreased emphasis in R&D should be placed on Improving combustion technolo-gies for densifled blomass fuels and on developing end uses and markets for thedensifled biomass product.(P-134)

Wood (22) The Committee recommends that a study of how the increasing combustion ofwood in urban areas will affect air quality should begin immediately. Such a studyshould be completed before expanded use of firewood is recommended for urbancentres.(P-135)

(23) Fire safety regulations should be reviewed and strengthened so that the installa-tion and use of wood stoves and fireplaces does not lead to a tragic increase inthe incidence of fires in homes using fuel wood.(P-135)

Wood—Methanol

(24) The Committee believes that the technology of biomass gasification should befunded on a priority basis In biomass RAD. It has the potential of allowing greateruse of wood (and other biomass feedstocks) to fire systems which traditionallyhave used fossil fuels. It is perhaps the tast part of Hie technology of methanolsynthesis from biomass which must be improved upon to assure commercializa-tion of this alcohol fuel option.(P. 135)

(25) Canada's extensive peat deposits represent a significant alternative energyopportunity, but our resource base has been only partially outlined. An accurateassessment of its quantity, quality and location should be completed.(p. 138)

(26) The Committee recommends that peat RAD encompass the development of anefficient technology for the gasification of peat. This would allow Canada tobroaden Its resource base for the production of the alternative liquid transporta-tion fuel methanol.(p. 138)

FiuidizedBedCom-buetton

(27) The Federal Government should undertake a thorough analysis of the opportuni-ties and benefits of fiuidized bed combustion in the Canadian context, and of thefunding levels necessary to exploit the technology to maximum advantage.Topics which should be addressed In the analysis include the choice betweenvarious FBC technologies from economic and environmental standpoints, the useof fuels other than coal, and the nature of regional opportunities.(P 142)

Coal-Oil (28) Canadian RDAD in coal-oil mixture technology should be accelerated wherefeasible. A heavy emphasis should be placed on the rapid deployment of thistechnology In the Maritime Provinces.(P. 142)

229

CoalLiquefaction

DistrictHeating

Cozener-atton

Small-ScaleHydro

FuelCells—Hydrogen

Fusion

GeothemalEnergy

Heat

(29) Coal liquefaction should not be adopted as a long-term energy option for Canada.In the shorter term, however, a limited number of coal liquefaction projects aimedprimarily at export markets could be accepted — with stringent environmentalsafeguards — to earn foreign exchange, to generate skilled employment andtechnological expertise, and to provide a supplementary source of synthetic fuelfor domestic use in an emergency.(P-146)

(30) The Committee recommends that district heating should be considered as anenergy-conserving technology for new subdivisions, communities and industrialparks.(P. 150)

(31) The Committee encourages Canadian utilities to look more favourably uponco-generation and to devise means for promoting the broader use of this tech-nology, possibly through Joint ownership of such systems with industrial partners,(p. 154)

(32) The Committee recommends that financial assistance be extended to isolatedcommunities which rely upon diesel-generated electricity to enable them to installsmall hydro units where an appropriate site exists. The Committee further recom-mends that this technology be vigorously promoted for its export potential.(p. 156)

(33) The Committee recommends that research on fuel cells be funded as part of acommitment to developing a hydrogen economy for Canada. In particular, thedevelopment of fuel cells for the transportation sector should be given highpriority as their use promises to substitute for transportation fuels, to reducevehicle exhaust emissions and to develop a market for hydrogen.(P. 159)

(34) The Committee recommends that the program of expenditures proposed by theNRC Advisory Committee on Fusion-Related Research be adopted by the FederalGovernment. For the five-year period from fiscal year 1980-81 to 1984-85, thisrepresents an expenditure of approximately $54 million (in constant 1979 dol-lars). An independent review should be carried out in the third year of theprogram and after five years to determine its effectiveness.(p. 169)

(35) The Committee recommends that Federal expenditures on geothermal energy besufficiently large to accomplish at least the following: to define the size of thegeothermal resource in Canada; to promote development of this energy form,especially for space heating; and to determine the feasibility of extracting thermalenergy from hot, dry rocks.(p. 177)

(36) The Committee recommends that heat pump use in suitable community recrea-tion complexes be encouraged and that all three levels of government investigatethe potential for financial assistance In this regard.(P-181)

(37) Governmental and industrial RAD in Canada should continue to refine heat pumptechnology. Emphasis should be placed upon penetrating commercial, residentialand industrial markets and upon seeking the most effective marrying of heatpumps with other energy technologies.(p. 182)

230

RECOMMENDATIONS

Hydrogen (38) The Committee recommends that an energy system based upon hydrogen andelectricity as the principal energy currencies be adopted by the Government ofCanada as a long-term policy objective.(p. 188)

(39) The Committee believes that hydrogen will be an important element of Canada'sfuture energy system and recommends that we begin now to develop thetechnology and infrastructure for hydrogen production, distribution and use.(p. 188)

(40) The Committee agrees that the early demonstration of a hydrogen-based urbantransportation system is required in Canada and recommends that research intothis use of hydrogen be supported with the aim of rapid commercialization.(p. 188)

(41) The Committee recommends that the Federal Government be prepared to spendup to $1 billion over the next five years to foster the broad development of ahydrogen-based energy system and to establish Canada as a world leader inhydrogen technology.(p. 189)

(42) The Committee recommends that a Commission, to be known as HydrogenCanada, be established to act as the lead agency for hydrogen RD&D andcommercialization in Canada. This Commission should report to the proposedMinister of State for Alternative Energy and Conservation.(P-189)

(43) The Committee recommends that the proposed Minister of State for AlternativeEnergy and Conservation begin a review of the progress and accomplishments ofHydrogen Canada after eighteen months, with the review to be completed withinsix months. A further review should be conducted after the fourth year of theprogram, with subsequent reviews to follow at five-year intervals.(P. 190)

(44) The Committee recommends that the results of the periodic reviews of HydrogenCanada's progress be tabled in Parliament within three months of their comple-tion and, In the event that Parliament is not sitting at the time, the Minister bepermitted to make them public.(P. 190)

Propane (45) Propane use should be encouraged in the short and medium terms for vehiclefleets refueled at central locations.(P. 192)

CompressedNatural

(46) The Committee recommends that compressed natural gas be encouraged for useas a fuel in large fleets of vehicles which travel limited distances and are fueled atcentral filling stations,(p. 193)

SyntheticGasoline

(47) Because synthetic gasoline does not reduce hydrocarbon usage and because itsproduction Is nonconserving in nature, the Committee recommends that theproduction of synthetic gasoline from fossil fuel resources should not be viewedas an alternative energy solution of major importance for the transportationsector.(P. 194)

231

Uethanol (48) To develop a truly alternative vehicle fuel option for consumers, the Committeerecommends that the Government of Canada urge automobile manufacturers toproduce methanol and dual-fuel engines in Canada. Through this action and thedevelopment of a methanoMuel-producing Industry, Canada could become aworld leader in methanol production and utilization,(p. 195)

Ethanol (49) The Committee recommends that ethanol produced in this country should beused for extending supplies of gasoline through the production of gasohol. We donot recommend the use of ethanol-powered cars as a major alternative transpor-tation option.(P. 196)

Air- (50) The Committee recommends that the Federal Government closely monitor theAluminium development of the alumlnunrair battery system and that it support commerciali-Battery zation of this power system in Canada.

(P. 196)

ElectricVehicle

(51) The Committee recommends that Canada IN »much more actively involved inelectric vehicle research, development and demonstration. This effort should bea systems approach which concentrates not only on propulsion but also on thedesign and construction of all the components required to produce a completelyCanadian electric vehicle.(P. 198)

(52) The Committee believes that RD&D in this country should < itrate on all-elec-tric vehicles rather than on heat engine/electric hybrids. If hybrid propulsionRD&D is pursued at all, it should be directed towards developing a fuel cell/elec-tric hybrid. This would allow Canada to do research in two areas of nonconven-tJonal propulsion simultaneously, so that at some future date each technologycould be profitably exploited on its own.(P. 198)

Hydrogen (53) Canada should pursue the use of hydrogen as an alternative aviation fuel and thisactivity should form part of the overall RD&D efforts of Hydrogen Canada,(p. 200)

TidalPower

(54) To determine whether a tidal power development in the Bay of Fundy remains aviable proposition, the Committee recommends that an economic feasibility studybe initiated without delay to verify the 1977 conclusions of the Tidal PowerReview Board, and ihat funding In the order of $300,000 be allocated for thispurpose.(p. 206)

(55) If the findings of the economic feasibility study are favourable, the Committeefurther recommends that a three-year pro-investment design engineering, socio-economic and environmental study, as outlined in the 1977 Report, be undertak-en and that funding In the order of $50 million be allocated for this purpose.(P. 206)

(56) if the findings of the definitive study are favourable, the Committee recommendsthat tidal power development be undertaken MI the Bay of Fundy.(P. 207)

232

RECOMMENDATIONS

OceanEnergy

(57) The Committee believes that Canada should keep up to date with internationaldevelopments in the field of wave power research and should continue toparticipate in joint R&D ventures. It also recommends, however, that wave powerresearch should have no priority status in Canadian energy research and develop-ment programs.(p. 207)

(58) The Committee believes that research and development of OTEC energy shouldnot be funded by the Federal Government at this time.(p. 210)

(59)

Conservation

ActiveSolar

The Federalration to Include

(P-212)

should extend its public education program on cortser-on passive solar energy and energy-efficient build-

Photovoltaica

WindEnergy

(60) rtMserch should be aimed at reducing the cost and establishing the reliability andduraMHy of thermal storage components in active solar systems.(p. 215) T

(61) The fundng level for RDM in chemical and large-scale thermal heat storage mustbe Increased substantially and steps must be taken to assist in the commerciali-zation of the systems developed.(p. 215)

(62) Consumer incentives for active solar systems should be put in place only whenstandards have been developed end warranties can be offered.(P. 217)

(63) The Committee welcomes the recent announcement of a large-scale demonstra-tion program for solar domestic hot water heating systems and recommends asimilar program for active solar space heating systems. This program shouldincorporate a range of storage systems including zeolite and sodium sulphide.(p.217)

(64) In light of both the domestic and export potential for photovoltaic systems, theCommittee recommends that Canada's ROAD efforts in photovoltaics beaccelerated beyond the levels currently planned.(P-219)

(65) Funding and technical assistance for installing wind/diesel hybrid systems shouldbe provided to remote communities, with appropriate wind characteristics, nowrelying on diesel fuel for electrical generation. This assistance would not onlyhelp such communities reduce their need for petroleum but would also create anImmediate market for wind turbines and hasten the commercialization of thistechnology.(p. 224)

233

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van Velzen, D. and H. Langenkamp, "ThermochemicalHydrogen Production by the Mark-13 Process: AStatus Report", Proceedings of 14th IntersocietyEnergy Conversion Engineering Conference, Boston,3-10 August 1979, p. 783-789.

Vielvoye, Roger and Larry Auldridge, "Global Oil Pro-duction Dips 4 % during 1980", Oil& Gas Journal,Vol. 79, No. 10. 9 March 1981, p. 43-47.

Waddington, Daryll C , The Canadian Balance of Pay-ments to the Year 2000, Royal Bank, November 1979.

Webb, Michael and Martin J. Ricketts, The Economics ofEnergy, MacMillan Press Ltd., London. 1980.

Weintraub, Pamela. "Splitting Water", Discover, Vol. 2,No. 2. February 1981, p. 36-38.

Westcoast Transmission Company, Annual Report,1979.

Whaley, H., The Canadian Coal-Oil Mixture Program,CANMET Report ERP/ERL 80-11(J), Department ofEnergy, Mines and Resources, Ottawa, April 1980.

Wilkinson, B.W. and B.L. Scarfe, "The Recycling Prob-lem", in Energy Policies for the 1980s, Vol. 1, OntarioEconomic Council, Toronto, 1980.

Williams, J.D., Solar Energy Technology and Applica-tions, Ann Arbor, Michigan, 1977.

Williams, R.M., "Uranium", in Canadian Minerals Year-book 1978 (preprint), Department of Energy, Minesand Resources, Ottawa, 1980.

Willson, Bruce F., The Energy Squeeze: Canadian Poli-cies for Survival, James Lorimer & Company, Toronto,1980.

Wilson, Carroll L. (Project Director), Coal - Bridge to theFuture, Report of the World Coal Study, BallingerPublishing, Cambridge, Mass., 1980a.

Wilson, Carroll L. (Project Director), Future Coal Pros-pects: Country and Regional Prospects, Report of theWorld Coal Study, Ballinger, Cambridge, Mass.,1980b.

Wyllie. Peter J., The Dynamic Earth: Textbook in Geo-sciences, John Wiley & Sons, Toronto, 1971.

Yaverbaum, L . Fluidized Bed Combustion of Coal andWaste Materials, Energy Technology Review No. 15,Noyes Data Corp., Park Ridge, N.J., 1977.

Zwartendyk, J., What is Mineral Endowment and HowShould We Measure It?, Mineral Bulletin MR 126,Department of Energy, Mines and Resources, Ottawa,1972.

242

Appendices

APPENDIX A

Units and Conversion Factors

THE INTERNATIONAL SYSTEM OF UNITS

A new system of units is being adopted worldwide.This system of measure, the most accurate everdevised, is called the International System of Units andofficially abbreviated as SI (for Système International) inall languages. Established by the 11th General Confer-ence of Weights and Measures in 1960, SI is intended asthe basis for a global standardization of measurement.

In January of 1970, the Canadian Governmentintroduced its White Paper on Metric Conversion, fol-lowed by the passage in April 1971 of its Weights andMeasures Act. Canada's Metric Commission was estab-lished in June of 1971 and a target date of 1 January1979 was set for the exclusive use of SI. Although thisgoal was not fully achieved, Canada nonetheless stoodwell along the road to SI conversion as the 1980sbegan.

Table A-1: SI BASE AND SUPPLEMENTARYUNITS

Quantity Name Symbol

BASE UNITS

Length

TimeElectric currentThermodynamic temperatureAmount of substanceLuminous intensity

SUPPLEMENTARY UNITS

Plane angleSolid angle

metre mkilogram kgsecondamperekeivin*"molecandela

sAKmolcd

radian radsteradian sr

<"> Although the SI unit of thermodynamic temperature isthe kelvin, the Celsius scale will continue to be mostcommonly used for temperature measurements.Application of the Kelvin scale is generally restrictedto scientific work.

Source: Pedde el al. 1978, p. 2.

SI, while based upon the decimal system with itsmultiples of 10, is not synonymous with the metricsystem since it excludes many metric units that havebecome obsolete and includes a few units, such as thesecond, which are not metric. SI units are divided intothree classes: (1) base units, (2) supplementary unitsand (3) derived units. The base and supplementary unitswere adopted by the International Organization ofWeights and Measures at its 10th (1954) and 11th(1960) General Conferences. Derived units are formedby algebraic relations between base units, supplemen-tary units and other derived units. Table A-1 gives the SIbase and supplementary units; Table A-2 lists common-ly used derived units.

Table A-2: COMMONLY USED SIUNITS

Quantity

AreaVolumeDensity

EnergyPowerPressureSpeed, velocityAcceleration

Thermal flux density

Frequency

Unit

square metrecubic metrekilogram percubic metrejoulewattpascalmetre per secondmetre per secondsquaredwatt per squaremetrehertz

DERIVED

Symbol

m2

m3

kg/m3

JWPam/s

m/s2

W/m2

Hz

The SI package allows for continued use of certainnon-SI units. Again we consider only the most frequentlyoccurring examples. The hectare (ha) generally replacesthe acre as the measure of land and water areas, withthe square metre being the preferred SI unit for othermeasures of area. Although the second is the SI baseunit for time, other units such as the hour (h), day (d)and year (a) will continue to be used. Degrees Celsius(°C) will continue as the common measure of tempera-

245

ture, with Kelvin temperature being generally relegatedto the scientific domain. Unfortunately, three names nowexist to describe the same amount of mass, 1000kilograms — metric ton (t), tonne (t) and megagram (Mgor one million grams). While the megagram is the correctSI expression, it is not widely recognized and "tonne"seems more likely to prevail in the Canadian literature.For this reason, we have preferred not to express massin megagrams in this Report.

SI PREFIXES

Many of the SI units with which we work are smallmeasures. The pascal, for example, is a very small

pressure, about equivalent to a dollar bill lying flat on asurface. In comparison, atmospheric pressure at sealevel normally falls in the range of 95,000 to 105,000pascals. To avoid the cumbersome expression of largeand small quantities, the SI package includes a systemof decimal multiples expressed as word prefixes andadded to the unit names. Thus atmospheric pressurebecomes 95 to 105 /c/topascals, the generating capacityat Churchill Falls in Labrador is expressed as 5,225megawatts and Canada's export of electricity to theUnited States in 1980 is given as 30,180 g/grawatthoursof energy. Table A-3 presents the full list of SI unitprefixes and gives examples of their use.

Table A-3: SI UNIT PREFIXES

Multiplication Factor

1 000 000 000 000 000 000 = 101B

1000 000 000 000 000 = 10«1 000 000 000 000 = 1012

1 000 000 000 = 109

1 000 000 = 10s

1 000 = 103

100 = 10*10 = 10'

0.1 = 10-'0.01 = 1fr*

0.001 = 10-3

0.000001 = 10-e0.000000001 = 10-9

0.000000000001 = 10-'2

0.000000000000001 = tO-15

0.000000000000000001 = 10-">

<•> Except (or the nontechnical reference to "centimetre".

Source: After Pedde et al. 1978, p. 10.

Prefixand

Symbo

exapetaterag'gamegakilohectodecadecicentimillimicronanopicofemtoalto

EPTGMkh -dadc ..mMnPfa

Example and Symbol

exajoulespetajoulesterawattsgigawatthoursmegalitreskilopascals

\I...1) millimetres

microgramsnanosecondspicohertzfemtofaradsattocoulombs

EJPJ

TWGWh

MlkPa

mmpgns

pHzfF

aC

use of these (our prefixes is avoided in most circumstances.

CONVERSION FACTORS

The following conversion factors are either exact orcorrect to four significant figures.

Distance1 foot = 0.3048 metre1 metre = 3.281 feet1 statute mite= 1.609 kilometres

= 0.8690 international nauticalmile

1 international nautical mite= 1.151 statute miles= 1.852 kilometres

1 kilometre= 0.6214 statute miie= 0.5399 international nautical mile

1 square foot = 0.09290 square metre1 square metre = 10.76 square feet1 square mite= 640 acres

= 2.590 square kilometres= 259.0 hectares

1 square kilometre^ 0.3861 square mile= 100 hectares= 247.1 acres

1 acre = 0.4047 hectare1 hectare = 2.471 acres

Volume1 cubic foot = 0.02832 cubic metre1 cubic metre= 35.31 cubic feet

246

APPENDIX A

= 6.290 American barrels= 1000 litres

1 American barrel = 42 American gallons= 34.97 Imperial gallons= 0.1590 cubic metre= 159.0 litres

1 American gallon = 3.785 litres11mperial gallon = 4.546 litres

1 long ton= 2240 pounds= 1.12 short tons= 1.016 tonnes

1 short ton= 2000 pounds= 0.8929 long ton= 0.9072 tonne

1 tonne= 2205 pounds= 1.102 short tons= 0.9842 long ton= 1000 kilograms= 1 megagram

1 pound = 0.4536 kilogram1 kilogram = 2.205 pounds

Energy1 British thermal unit = 1054 joules1 kilowatthour= 3412 British thermal units

= 3.600,000 joules1 quad= 1 quadrillion British thermal units

= 10<5 British thermal units= 1054 petajoules= 1054 x1015 joules

1 kilowatt= 3,600.000 joules/hour= 1.341 imperial horsepower

11mperial horsepower = 745.7 watts1 British thermal unit/hour = 0.2931 watt

TEMPERATURE

Temperature is that property of systems whichdetermines if they are in thermodynamic equilibrium, twosystems being in equilibrium when their temperatures(measured on the same scale) are equal. Temperaturecan be specified in various arbitrary and empirical waysbased upon changes in volume, length, electrical resist-ance and so forth. Not surprisingly, an interesting varietyof temperature scales has been devised of which threeare of concern here — the Fahrenheit, Celsius (centi-grade) and Kelvin scales. The correspondence amongthese three scales is illustrated in Figure A-1 , the math-ematical relationships being:

5(F-32)9

K = C + 273.16

Figure A-1 : A COMPARISON OF THE FAHRENHEIT,

CELSIUS AND KELVIN TEMPERATURE SCALES

Source: After Pedde ef al. 1978, p. 4.

Although the Kelvin scale is the one adopted in theSI scheme, its use is nonetheless limited to scientificmatters and most temperatures are measured indegrees Celsius. Zero on the Kelvin scale (-273.16°C) istermed the absolute zero of temperature, with the thirdlaw of thermodynamics telling us that no system can betaken to a temperature of absolute zero (that is, to astate characterized by the complete absence of heat).

PETROLEUM SPECIFIC GRAVITY

The specific gravity of any liquid is the dimension-less ratio of the density of that liquid to the density ofwater, measured at a standard temperature of 4°C. Ifthe specific gravity of a liquid is less than one, that liquidwill float on water; if more than one, it will sink. Crudeoils have a specific gravity normally falling in the rangeof 0.80 to 0.97, which corresponds to 8.0 to 6.6 barrelsper tonne. Taking an approximate world average for thespecific gravity of all crude oils produced, one tonne ofcrude is about equal to 7.3 barrels.

247

In the petroleum industry, however, the specificgravity of oil is normally expressed in degrees of API(American Petroleum Institute) gravity. In this measuringscheme, oil with a low specific gravity has a high APIgravity and, other factors being equal, the higher theAPI gravity the more valuable the oil. The formula forcalculating API gravity is

141.5•API = —131.5specific gravity 60"

where the divisor is the specific gravity of a 60°APIgravity oil measured at 60°F (15.6°C). The followingtable shows the equivalence between API gravity andspecific gravity.

Most crude oils fall within the range of 25° to 40°API gravity. Canada's conventional crude oil productionaverages a little higher than 35° API. Lloydminsterheavy crude is about 16° and Athabasca bitumenroughly 8° to 9° API.

Table A-4: THE EQUIVALENCE BETWEEN APIGRAVITY AND SPECIFIC GRAVITY

"API Gravity

010152026303640465060

Specific Gravity

1.0761.0000.96590.93400.89840.87620.84480.82510.79720.77960.7389

Source: Hunt, 1979. p. 544.

Barrels/Tonne

5.866.306.536.757.027.197.467.647.918.098.53

248

APPENDIX B

Witnesses and Intervenors at PublicHearings

List of witnesses and intervenors who appeared beforethe Special Committee, showing the Issue in which theirevidence appears.

WITNESS ISSUE DATE

WITNESSES AT PUBLIC HEARINGS

WITNESS ISSUE DATE

Agriculture Canada

Mr. R.D. Hayes 25 12/11 /80Energy EngineerEngineering and Statistical

Research Institute

Dr. E.J. LeRoux 25 12/11/80Assistant Deputy MinisterResearch BranchChairman of Interbranch

Energy Committee

Dr. B. Perkins 25 12/11 /80DirectorRegional Development and

Analysis DirectorateRegional Development and

International AffairsBranch

Mr. P.W. Voisey 25 12/11/80DirectorEngineering and Statistical

Research Institute

Association of Consulting Engineers of Canada

Mr. D. Farlinger 29 20/11 /80ChairmanEnergy Affairs Standing

Committee

Mr. J.L. GreerPast ChairmanEnergy Affairs Standing

Committee

29 20/11/80

Mr. I.W. McCaigChairmanEnergy Resources

Sub-Committee

Mr. K.A. McLennanPresident

Mr. O. ScudamoreMember, Energy Resources

Sub-Committee

29

29

29

Atomic Energy of Canada LimitedDr. M. HammerliSection Leader,

ElectrochemistryGeneral Chemistry Branch

6

20/11/80

20/11/80

20/11/80

16/07/80

Canadian Energy Development SystemsInternational

Mr. D.A. Henry 28 19/11/80President

Canadian Federation of Agriculture

Dr. L. Emery 27 18/11/80Member, Energy Committee

Mr. G. Flaten 27 18/11/80First Vice-President

Mr. D. Kirk 27 18/11/80Executive Secretary

Mr. D. Knoerr 27 18/11/80Executive Member

Canadian National Committee, World Energy Con-ference

Dr. E.P. Cockshutt 24 05/11 /80Member of Executive Com-

mittee

Dr. J.S. Foster 24 05/11 /80Chairman

249

WITNESS ISSUE DATE

Canadian Renewable Energy News

Mr. J. Passmore 9 30/07/80Features and International

Editor

Canadian Solar Industries Association

Mr. R. Davies 28 19/11/80Chairman

Mr. A, Gatrill 28 19/11 /80Executive Director

Mr. J. Ramsden 28 19/11/80Treasurer

Chemical Institute of Canada

Dr. W. Schneider 23 04/11 /80Member of the Institute

Coal Association of Canada

Mr.G.T. Page 27 18/11/80President

Co-generation Associates Limited

Mr. A. Juchymenko 10 31/07/80President

Coreco Incorporated

Mr. Daniel Crevier 11 04/09/80President

Ouomo Import Limited

Mr. S. Verrie 12 05/09/80President

Mr. M.S. Werger 12 05/09/80Secretary

Economic Council of Canada

Mrs. Bobbi Cain 9 30/07/80Research Economist 26 12/11/80

Dr. P. Cornell 9 30/07/80Senior Policy Advisor

Mr. D. Paproski 9 30/07/80DirectorSeventeenth Review

Dr. R. Preston 9 30/07/80Director, Candide Research 26 13/11 /80

Group

Dr. D.W. Slater 26 13/11 /80Chairman

Electric Vehicle Association of CanadaMr. F. G. Johnson 30 25/11 /80President

WITNESS ISSUE DATE

Energy, Mines and Resources Canada

Mr. B. Cook 31 02/12/80Technical AdvisorOffice of Energy Research

and Development

Dr. P.J. Dyne 6 16/07/80Director 31 02/12/80Office of Energy Research

and Development

Dr. A. Jessop 26 13/11/80Head, Geothermal Studies

Group

The Honourable MarcLalonde 30 25/11/80

Minister

Dr. K. Whitham 1 25/06/80Assistant Deputy MinisterConservation and

Non-Petroleum Branch

Energy Probe

Dr. D. Brooks 22 30/10/80Coordinator, Ottawa Office

Environment Canada

Mr. R.H. Clark 5 15/07/80Senior Engineering AdvisorInland Waters Directorate

Mr.J. Labuda 26 13/11/80ChiefFuels and Air Pollution

DirectorateEnvironmental Protection

Service

Dr. D. McKay 26 13/11/80Climatological Applications

BranchAtmospheric Environment

Service

Mr. R.J. Neale 26 13/11 /80Manager, ENFOR ProgramCanadian Forestry Service

Mr. D.L. Robinson 26 13/11/80Senior Scientific AdvisorEnvironmental Conservation

Service

Dr. E.F. Roots 26 13/11/80Science Advisor

Mr. J.B. Seaborn 26 13/11/80Deputy Minister

250

APPENDIX B

WITNESS

F.T. Fisher's Sons Limited

Mr. S.T. Fisher

Friends of the Earth

Mrs. H. LajambeResearcher

Mr. J. RobinsonResearcher

Mr R. TorrieResearcher

GazMótropolitainlnc.

Mr. J. BaladiVice-PresidentExploitation and Expansion

Group

Mr. Pierre NoelEconomist

Mr. R. NoelVice-President, Marketing

Mr. Jean-Francois VillionDirector, General Planning

Huron Ridge UmHedMr. N.J. MacGregor

ICG Scotia Gas Limited

Mr. M.G. MeacherVice-President and General

Manager

Mr. H. SmithLegal Counsel

Imperial Oil Limited

Mr. W.A. BainManager, Energy StudiesCorporate Planning

Services

Mr. D. J. CameronManager, Renewable

EnergyCorporate Planning

Services

ISSUE

11

10

10

10

11

11

11

11

34

19

19

9

9

Institute of Man and Resources

Mr. B. BrandonProject CoordinatorWood Energy

Mr. A. WellsExecutive Director

Mr. W. ZimmermanResearch Director

20

20

20

DATE

04/09/80

31/07/80

31/07/80

31/07/80

04/09/80

04/09/80

04/09/80

04/09/80

09/12/80

24/09/80

24/09/80

30/07/80

30/07/80

25/09/80

25/09/80

25/09/80

WITNESS ISSUE DATE

Inter-City Gas Corporation

Mr. P. Ashton 29 20/11 /80Consultant

Mr. H.C. Coppen 29 20/11 /80Vice-President

Mr. N.J. Didur 29 20/11/80Group Vice-President

Mr. J.A. Khouri 14 09/09/80President

Lawrenc0 Uvei inure National Laboratories, CaH~fomla, U.S.A.

Dr.J. Emmett 35 02/12/80Associate DirectorLaser Fusion Program

Dr. R. Post 35 02/12/80Deputy Associate DirectorMagnetic Fusion

Energy Physics

Marinetech Laboratories Ltd.

Mr. G. Jones 14 09/09/80President

Mohawk Oil Company Limited

Mr. A.E. Meyer 15 10/09/80Consultant

Morrison Beatty Limited

Mr. W.D. Morrison 13 06/09/80Principal of Morrison Beatty

Ltd.

McKenzie-McCulloch Associates

Mr. I. McKenzie 13 06/09/80Principal

National Energy Board

Mr. E.S. Bell 34 09/12/80DirectorElectric Power Branch

Mr.C.G. Edge 34 09/12/80Chairman

Mr. A.N. Karas 5 15/07/80Assistant DirectorPlanning GroupElectric Power Branch

Mr. P.G. Scotchmer 34 09/12/80DirectorOil Policy Branch

251

WITNESS ISSUE DATE WITNESS ISSUE DATE

Mr. K.W. Vollman 34 09/12/80Director Energy Resources

Branch

National Research Council of Canada

Mr. R.M. Aldwinckle 4 09/07/80Program ConvenorSolar Energy Project

Dr. R.C. Biggs 4 09/07/80Senior Technical AdvisorSolar Energy Project

Mr. M.S. Chappell 2 02/07/80Task CoordinatorRenewable Energy

Dr. E.P. Cockshutt 33 04/12/80ManagerEnergy Research and De-

velopment Program

Mr. W.A. dimming 33 04/12/80Senior Vice-President

Dr. L. Kerwin 33 04/12/80President

Dr. G.M. Lindberg 2 02/07/80DirectorNational Aeronautical Es-

tablishment

Dr. G.R. Mogridge 7 22/07/80Research OfficerHydraulic and Tidal Power

Dr. J.J. Murray 6 16/07/80Research Officer

Dr. R.P. Overend 3 08/07/80Program Convenor 33 04/12/80Biomass Energy

Mr. J. Ploeg 7 22/07/80Program ConvenorHydraulic and Tidal Power

Dr. B.D. Pratte 7 22/07/80Research OfficerHydraulic and Tidal Power

Dr. P.A. Redhead 2 02/07/80Director 33 04/12/80Division of Physics

Mr. Ross Silversides 3 08/07/80Forestry Biomass Specialist

Dr. J.H. Simpson 4 09/07/80Solar Energy Project

Dr. J.B. Taylor 6 16/07/80Program ConvenorConservation and Storage

Mr. R.J. Templin 2 02/07/80Laboratory HeadLow Speed Aerodynamics

New Brunswick Development Institute

Mr. R.E. Tweeddale 21 26/09/80Chairman, Energy Commit-

tee

New Brunswick Federationof Agriculture

Mr.T. Demma 21 26/09/80Secretary-Manager

Newfoundland Light and Power Company

Mr. G.J. Adams 18 23/09/80Treasurer

Mr. D.C. Hunt, Q.C 18 23/09/80Director

Mr. A.F. Ryan 18 23/09/80Assistant to the General

Manager

NOVA, an Alberta Corporation

Mr. J.E. Feick 15 10/09/80Vice-President

Ontario Hydro

Mr. S. StriekerResearch DivisionElectrical Department

29/07/80

Prince Edward Island Energy Corporation

Mr. C.K. Brown 20 25/09/80Executive Director

Public Works Canada

Dr. F. Snape 24 05/11/80DirectorSolar Projects

Royal Architectural Institute of Canada

MissM. Demers 32 03/12/80Architect

Mr. R. Elliott 32 03/12/80Executive Director

Mr. J.O. Miller 32 03/12/80Vice-President

Saskatoon Environmental Society

Mr. H. Boerma 16 11/09/80

252

APPENDIX B

WITNESS ISSUE DATE WITNESS ISSUE DATE

Scotia Llquicoal Limited

Mr. J.R. Clore Jr.Production Manager

Mr. R.M. Medjuck, Q.CChairman

Mr. L.E. PoetschkePresident

19

19

19

Shawinigan Engineering Company Ltd.Mr. G. S. FarkasExecutive Engineer

Solace Energy Centre

Mr V. EnnsVice-President

9

14

Solar Applications and Research

Mr. R.W. BryentonProfessional Engineer

Mr. C.P. MattockRepresentative

14

14

Solar Energy Society of Canada Inc.

Professor R. ChantTreasurer

Dr. G. YuillVice-Chairman

17

17

Town of Oromocto, New Brunswick

Mr N MillsSuperintendantPublic Works

Mr. W.C. RipleyMayor

Transport Canada

Mr. N.R. Gore....DirectorStrategic Studies Branch

Mr. J.J. GravelDirector GeneralResearch and Development

Mr. G.B. MaundStrategic Studies

Union Gas

Mr. R.S. AdieManagerContract Sales

Mr. S.T. BellringerVice-PresidentRegulatory Affairs

21

21

36

36

36

12

12

24/09/80

24/09/80

24/09/80

30/07/80

09/09/80

09/09/80

09/09/80

12/09/80

12/09/80

26/09/80

26/09/80

11/12/80

11/12/80

11/12/80

05/09/80

05/09/80

Individual Witnesses

Mr. Andre BaluMontreal, Quebec

Mr. D.C. CampbellMontreal, Quebec

Hon. Jack DavisM.L.A. North Vancouver-

SeymourBritish Columbia

Mr. R. DumontSaskatoon, Saskatchewan

Dr. K. HareProvost of Trinity CollegeUniversity of Toronto

Professor J. HelliwellDepartment of EconomicsUniversity of British

Columbia

Dr. R.F. LeggetConsultantOttawa, Ontario

Professor M. MargolickDepartment of EconomicsUniversity of British

Columbia

Mrs. Kay MatusehVancouver, B.C.

Professor C.H. MillerDepartment of Mechanical

EngineeringTechnical University

of Nova Scotia

Dr. Arthur PorterBelfountain, Ontario

Professor D. ScottChairmanDepartment of Mechanical

EngineeringUniversity of Toronto

Professor F. SmithDepartment of ChemistryMemorial University of New-

foundland

Professor G.B. WardFredericton, New Brunswick

Mr. B.E. WerenskioldMississauga, Ontario

11

13

14

16

34

14

23

14

14

19

13

29

18

25

13

04/09/80

06/09/80

09/09/80

11/09/80

09/12/80

09/09/80

04/11/80

09/09/80

09/09/80

24/09/80

06/09/80

20/11/80

23/09/80

12/11/80

06/09/80

253

INTERVENORS AT PUBLIC HEARINGS

INTERVENOR ISSUE

INTERVENOR ISSUE DATE

DATE

Circul-Alre (Eastern) Incorporated, Montreal,Quebec

Mr. S.E. Huza 11 04/09/80Executive Vice-President

Dr. B.C. Pant 11 04/09/80Vice-PresidentResearch and Development

Ecology Action Centre, Halifax, Nova Scotia

Ms. Susan Holtz 19 24/09/80

Energy Systems Limited, Toronto, Ontario

Mr. D. Hart 12 05/09/80President

Onakawana Development Limited, Ontario

Mr. P.Turner 13 06/09/80

Mr. A. Olaf Wolff 13 06/09/80Vice-President and General

Manager

South Okanagan Civil Liberties Society, Penticton,British Columbia

Mr. Walt Taylor 14 09/09/80Vice-President

The Biomass Energy Institute Inc., Winnipeg,Manitoba

Mr. E.E. Robertson 17 12/09/80Executive Director

The Crossroads Resource Group,Winnipeg, Manitoba

Mr. L. McCall 17 12/09/80

Mr. H. Selles 17 12/09/80

Trinity Solar Project, Toronto, Ontario

Reverend Patrick Doran 12 05/09/80ConsultantNational Affairs

Reverend Peter Hamel 12 05/09/80

Individual Intervenors

Mr. T. DeMone 20 25/09/80Prince Edward Island

Mr. T. Easter 20 25/09/80Prince Edward Island

Mr. K. Emberley 17 12/09/80Winnipeg. Manitoba

Mr. A. Larochelle 13 06/09/80Toronto, Ontario

Mr. H.F. MacDonald 20 25/09/80Prince Edward Island

•

Mr. Dimitri Procos 19 24/09/80Technical Universityof Nova ScotiaHalifax, Nova ScotiaMr. Bruce Young 14 09/09/80Penticton, B.C.

254

APPENDIX C

Witnesses at Informal CommitteeHearings

List of witnesses who appeared before the Special Com-mittee at informal hearings (not electronically recorded).

WITNESS DATE

WITNESS DATE

Allen-Drerup-White Limited, Toronto, Ontario

Mr. G. Allen................ 06/09/80Principal ,-;__-;- ~-y V

Ms. E. White 06/09/80Principal

Board of School Trustees, District No. 26, Frederic-ton, New Brunswick

Mr. T. Joordens 14/11 /80Director of Maintenance

Mr. R. Kilburn 14/11 /80ChairmanProperty Committee

Mr. G. Young 14/11/80MemberProperty Committee

City of Fredericton, Fredericton, New Brunswick

Mr. R. Danzinger 14/11/80Director of Planning

Conservation Council of New Brunswick, Frederic-ton, New Brunswick

Mr. D. Silk 14/11 /80President

Enerplan, Toronto, Ontario

Mr. G. Ross 06/09/80President

inertia Group Limited, Toronto, Ontario

Mr. J. Lstiburëk 06/09/80President =. ;

New Brunswick Electric Power Commission, Freder-icton, New Brunswick ._ -_;._..._

Mr. KB. Little :.^.:.'.r.r.:.v- 14/11/80 =--""-Acting Assistant Treasurer -.. i ._•:...

Mr. G.L. Titus 14/11 /80ManagerStrategic Development

Mr. P.J. Whalen : 14/11/80DirectorResearch and Development

Renewable Energy in Canada, Toronto, Ontario

Mr. R. Argue 06/09/80President

The Hay River and Area Economic DevelopmentCorporation, Hay River, N.W.T.

Mrs. F. Hasey 18/09/80Executive Manager

Yukon Conservation Society, Whitehorse, Yukon

Ms. N. MacPherson 19/09/80President

Individual Witness

Mr. M. Hambridge ; 19/09/80Whitehorse, Yukon

255

APPENDIX D

Other Written Submissions Received

List of individuals and organizations who submittedbriefs and letters to the Special Committee, but who didnot appear as witnesses.

Baird, Mr. Hamilton, Moncton, New BrunswickBarichello, Mr. C , Windsor, OntarioBatho, Mr. David G., Ottawa, OntarioBrown, Cherry L . The Conserver Society, Dunster, Brit-

ish ColumbiaBryan, Mr. R.C., Council cf Forest Industries of British

Columbia, Vancouver, British Columbia

Campbell, Mr. D.C., Canadian Electrical Association,Montreal, Quebec

Caron, Mr. Jean Ft., Honeywell Limited, Scarborough,Ontario

Chrysler, Mr. Geoffrey, Caliente Sun Systems, Ottawa,Ontario

Cote, Mr. R., Atomic Energy of Canada Limited, Ottawa,Ontario

Coulter, Mr. Philip E, Scarborough, Ontario

D'Amore, Mr. L.J., L.J. D'Amore and Associates Ltd.,Montreal, Quebec

Dangerfield, Mr. James, The Hydrogen Organization,Independence, Missouri, U.S.A.

Daniel. Mr. C. William, Shell Canada Limited, Toronto,Ontario

Davies, Mrs. Kay, Canadian Institute of Planners,Ottawa, Ontario

Dechow, Mr. Dick R., St. Catherines. OntarioDelisle, Mr. André, Bolé Inc., Quebec, QuebecDeLong, Mr. E.A., Kanata, OntarioDesautels, Mr. René C , Lubrimax Inc., Pointe Claire,

QuebecDionne, Mr. Pierre-Yves, Ste-Foy, Quebec

Edell, Mr. Dennis, Hampton Technologies Corp. Ltd.,Charlottetown, Prince Edward Island

Egglestone, Mr. A.E., Alberta Gas Chemicals Limited,Edmonton, Alberta

Ellenberger, Mr. Roger, ACCESS, Porters Lake, NovaScotia

Fetter, Mr. Stephen, Sault-Ste-Marie, OntarioFischer, Mr. Karl, Chiliiwack, British ColumbiaFoster, Mr. David, Energy Pathways - Policy Research

Group, Killaloe, Ontario

Glasstetter, Mr. Rudy, Toronto, OntarioGordon's Feversham Feeds, Feversham, OntarioGrammenos, Mr. Fanis, ECODOMUS Development Lim-

ited, Ottawa, OntarioGurney, Mr. Peter R., Intercontinental Engineering Ltd.,

Vancouver, British ColumbiaGutsfeld. Mr. A., Hamilton, Ontario

Hale, Mr. Neville E., Fathom Oceanology Limited, PortCredit, Ontario

Hart, Mr. Norman S., Sydenham, OntarioHathaway, Mr. Norman B., Dietrich-Hathaway Energy

Systems, Toronto, Ontario

Jalkotzy, Mr. Christoff, Solartic Energy Conscious Hous-ing Inc., Ottawa, Ontario

Jones, Mr. Trevor, Vancouver, British ColumbiaJones, Mrs. Anne H., The Regional Municipality of

Hamilton-Wentworth, Hamilton, Ontario

Jones, Mr. R., Realyne Machine and Design, Orangeville,Ontario

Jones, Mr. R.D., The Conserver Society, Dunster, BritishColumbia

Kashtan, Mr. William, Communist Party of Canada,Toronto, Ontario

Keyes, Mr. Thomas E., Regina, Saskatchewan

Lavoie, Mr. Joseph, Montreal, QuebecLeadman, Mr. Douglas, Perth, OntarioLépine, Mr. Yves, Ste-Anne-de-Bellevue, QuebecLewis, Mr. Jay, South Okanagan Environmental Coali-

tion, Penticton, British ColumbiaLewis, Mr. Ray, Langley, British Columbia

MacKinnon. Mr. Charles, Victoria, British ColumbiaMarlor, Mr. Lloyd, Sol-Term Research Limited, West

Vancouver, British ColumbiaMarshall, Mr. Gary E., OMNIUM Consultants Co.,

Ottawa, OntarioMartin, Mr. Conrad, Wyoming, OntarioMartin, Professor David, Lakehead University, Thunder

Bay, OntarioMatas, Mr. David, Winnipeg, ManitobaMcClure, Mr. Robert, Hamilton, OntarioMcCorquodale, Mr. R.P., Wetcom Engineering Limited,

Scarborough, OntarioMcFadden, Mr. David J., LeRoy-Somer Canada Limited,

Mississauga, Ontario

257

|.

McKintey. Mr. B., Athans Chemicals, Ottawa, OntarioMehler, Mr. Ted, Yellowknife, Northwest TerritoriesMichrowski, Dr. Andrew, Planetary Association for Clean

Energy Inc., Ottawa, Ontario

Newton, Mr. Ken, Ottawa, OntarioNoble, Mr. G.. IOTECH Corporation Ltd., Ottawa,

OntarioNorthover, Mr. A.C., Newmarket, Ontario

Olivier, Mr. Mario, Bolé Inc., Quebec, QuebecO"Shaughnessy, Mr. M., Ottawa, Ontario

Pallasch, Mrs. Elsie, Stoney Creek, OntarioPerley, Mr. Daniel R.. OMNIUM Consultants Co.,

Ottawa, OntarioPill, Dr. Juri, Toronto Transit Commission, Toronto,

Ontario

Quittenton, Mr. R.C., Quittenton Associates, Saskatoon,Saskatchewan

Schneider, Mr. M.H., University of New Brunswick, Fred-ericton, New Brunswick

Shapiro, Dr. M.M., Montreal, Quebec

Sinclair, Mr. G., Laser Fusion Limited, Concord, OntarioSmith, Mr. L.A., Stanfer Manufacturing Co. Ltd., Mon-

treal. QuebecStepp, Mr. Math. Moose Jaw, SaskatchewanStrang, Mr. D.K., Canadian Resourceccn Ltd., Calgary,

AlbertaStreet, Mr. R.J., Mohawk Lubricants Limited, North Van-

couver, British Columbia

Teekman, Mr. Nicholas, Dynamo Genesis Inc., Char-lottetown, Prince Edward Island

Thomson, Mr. William, Canadian Institute of Planners,Waterloo, Ontario

Thornton, Mr. S., Unionville, OntarioTidman, Mr. C . Nepean, OntarioTurvolgyi. Mr. B.L., DuPont Canada Incorporated, Mon-

treal, Quebec

Vandezande, Mr. Gerald, C.J.L. Foundation, Toronto,Ontario

Vigrass, Dr. Lawrence, University of Regina, Regina,Saskatchewan

Wilson, Mr. J.E., Ontario Hydro, Toronto, Ontario

258

APPENDIX E

Committee Travel

TRAVEL IN CANADAThe Committee visited every Province and the

Yukon and Northwest Territories during the course of itsstudy. In each capital city, in addition to holding publichearings, the Committee met with government represen-tatives.The Committee also visited a number of facilitiesconcerned with alternative energy development.

ALBERTA

Ministry of Energy and Natural Resources

Hon. C. Mervin Leitch. MinisterG.B. Mellon, Deputy Minister, Energy ResourcesThomas Ryley, Senior Analyst

BRITISH COLUMBIA

British Columbia Hydro and Power Authority

Joseph Stauder, Geothermal Energy DivisionBobWoodtey

Ministry of Energy, Mines and Petroleum Resources

Robert W. Durie, Assistant Deputy Minister ofPetroleum Resources

James HillDoug Horswill, Director, Policy Development, Energy

Resources BranchHarry Swain, Assistant Deputy Minister of Energy

Resources

Ministry of Universities, Science and Communica-tions

R.W. Stewart, Deputy Minister

FEDERAL GOVERNMENT AGENCIES

Energy Research Laboratories, Canada Gsztre forMineral and Energy Technology (CAHM£T),Department of Energy, Mines and Resources,Ottawa

E.J. Anthony, Fluidized-bed CombustionR.W. Braaten, Automotive Fuel and Domestic Heating

TechnologyT.D. Brown, Manager, Coal Resource and Processing

LaboratoryF.D. Friedrich, Research Scientist, Canadian Combus-

tion Research LaboratoryV.A. Haw, Acting Director-General, CANMET

G.K. Lee, Manager, Canadian Combustion ResearchLaboratory

B.I. Parsons, Chief, Energy Research LaboratoriesH. Whaley, Coal Combustion

National Research Council, Montreal Road Lab-oratories, Ottawa

The Committee's visit to the NRC facilities was com-bined with a public hearing and the participants arelisted in Appendix B.

MANITOBA

Department of Energy and Mines

M.A. Chochinov, Director, Energy ManagementBranch

L.P. Haberman, Director, Conservation and Renew-able Energy Branch

Paul E. Jarvis. Deputy Minister

Manitoba Energy Council

William McDonald, Secretary

NEW BRUNSWICK

Hon. Richard Hatfield, Premier

Department of Natural Resources

Robert Watson, Coordinator, Policy PlanningJohn Williamson, Energy Secretariat

Ministry of Finance and Minister Responsible forEnergy Policy

Hon. Fernand G. Dubê, Minister

New Brunswick Coal Limited

L.S. Armstrong, President and General Manager

New Brunswick Electric Power Commission

Hon. G.W.N. Cockburn, Q.C., Chairman

NEWFOUNDLAND

Department of Mines and EnergyHon. Leo D. Barry, MinisterDoug Inkster, Director, Hydro-Electric DivisionJohn H. McKillop, Deputy MinisterEdward Power, Assistant Deputy Minister, Energy

Newfoundland and Labrador Hydro

Victor Young, Chairman

259

NORTHWEST TERRITORIES

John Parker, Commissioner of the Northwest Territo-ries

Department of Renewable Resources

Jim Cumming, Chief, Energy ConservationPeter Hart, Special Assistant on Energy to Minister of

Renewable Resources

Ontario Hydro

J.E. Wilson, Manager, Public Hearings

Ontario Hydrogen Energy Task Force

Arthur C. Johnson, Chairman

Solartech LimitedScott GriffinDavid Wood, President

NOVA SCOTIA

Department of Mines and Energy

Hon. Ronald T. Barkhouse, MinisterJohn French, Director, Energy ManagementVaughn MunroeCarey Ryan, Senior EngineerW.S. Shaw. Deputy Minister

ONTARIO

Ministry of Energy

H.F. Bakker, Renewable Energy ProgramRichard Fry, Renewable Energy ProgramR.M.R. Higgin, Director, Renewable Energy ProgramSyd Johnson, Renewable Energy ProgramI.B. MacOdrum, Executive Coordinator, Conventional

EnergyW.W. Stevenson, Executive Coordinator, Strategic

Planning and AnalysisBunli Yang, Senior Advisor, Transportation and

Renewable Energy

Ministry of natural Resources, KempMlle

P.E. Anslow. Regional Forester, Eastern RegionB.A. Barkley, Program Forester, Hybrid Poplar

ProgramA.J. Campbell, Nursery SuperintendantJ. Carrington, Information OfficerD.P. Drysdale, Energy Coordinator for the MinistryR.W. Evers, Program Forester, Hybrid Poplar ProgramB.E. Hollingsworth, Program Technician, Hybrid

Poplar ProgramR.K. Keane, Program Technician, Hybrid Poplar

ProgramJ.R. Oatway, Regional Director, Eastern RegionW.E. Raitanen, Regional Forestry Specialist

Ministry of Transportation and Communications

K.O. Sharratt, Manager, Transportation Energy Man-agement Program

Ontario Energy Corporation

Peter Lamb, Executive Vice-President

PRINCE EDWARD ISLAND

Hon. J. Angus MacLean, Premier

Ministry of Tourism, Industry and Energy

Hon. Barry R. Clark, Minister

QUEBEC

Brace Research Institute, Faculty of Engineering,Macdonald College of McGill University, Ste-Anne-de-Bellevue, Quebec

T.A. Lawand, Director

Hydro-Quebec, Magdalen Islands Vertical Axis WindTurbine

Ministère de l'Énergle et des Ressources

Pierre Baillargeon, Adjoint aux affaires intergouvern-mentales

Jean Guérin, Directeur, Direction de ('analyse écono-mique et financiare

Denis L'Homme, Directeur, Direction générale desenergies conventionnelles

Gilles Toussingnant, Directeur, Direction de la produc-tion et de l'approvisionnement

Gilles St-Hilaire, Directeur, Direction des programmesdes energies nouvelles

SASKATCHEWAN

Saskatchewan Mineral Resources

Fred Heal, Director, Office of Energy ConservationJim Hutchinson, Assistant Director and Coordinator,

Energy Research and Development, Policy Planningand Research

Ron Sully, Director, Policy Planning and ResearchMenna Weese, Energy Policy Advisor, Policy Planning

and Research

YUKON

Ministry of Tourism and Economic Development

Hon. Dan Lang, Minister

260

APPENDIX E

INTERNATIONAL TRAVELThe Committee divided into subcommittees for the

international travel to obtain as broad an input as possi-ble from the public and private sectors in the countriesvisited, and to cover a variety of alternative energyfacilities.

BRAZIL

Vice-President of the Republic of Brazil

Antonio Aureliano Chaves de Mendonca, Vice-Presi-dent and Director of National Energy Program

COALBRA - Coque e Alcool de Madeira S.A., SaoPaulo

Renzo Dino Sergente Rossa, Technical Director

Committee of Mines and Energy, BrasiliaDeputy Génesio de Barros, Chairman

EMBRAPA (Empresa Brastteira de PesquisaAgropecuaria), Brasilia

Dr. Ademar BrandiniDr. Flavio CoutoDr. Porto

Ford Brazil, Sao Paulo

Luc de Serran, Chief EngineerLyn Fotstead, PresidentRobert Gerrity, Vice-PresidentLarry Kazanoushi, DirectorWellington Young, General Planning Manager

Forum das Americas/Brasttinvest

David Dana, Director, Formas das Americasde M. Junqueira, Project Director, BrasilinvestSamsao Woiler, Executive Director, Brasilinvest

Fundacao de Tecnologla Industrial (Division of Min-istry of Industry and Commerce), Rio de Janeiro

Alexandre HenriquesNancy lueiroz de AnaijoFerga Rosenthal

Petrobras, Rio de Janeiro

Rolf BrauerDieter BrodhunDr. IvoMarco Luiz dos Santoslleana Williams, Head, Product Development Division

Secretaria da Industrie, Comerico, Ciencia e Tec-nologia, Sao Paulo

Vincente Chiaverini, Executive Vice-President, Scienceand Technology Council

Secretariat of Industrial Technology, Brasilia

Marcos Lima Fernandes, Executive Director of theNational Executive Alcohol Commission (CENAL)

Lourival Carmo Monaco

Sondotecnia Engenharia, Rio de Janeiro

Jamie Rotstein, Directore-Presidente

Universidade Federal do Rio de Janeiro

Paulo Gomes, Director, Coordenacao dos Programasde Pos-Graduaco de Enginharia

Flavio GrynszpanCarlos Russo

FRANCE

Commissariat a I'Energie Solaire, Paris

M. Yves Perras

L'Agence Pour Les Economies d'Energie, Paris

M. Maillard, Economics of Renewable EnergyM. Jean Poulit

La Centrale de Chauffage Urbain de Paris

M. Triboulet, Plant Manager

La Ranee Tidal Power Station, DinardM. Julliard, Electricitè de France

Organization for Economic Cooperation and De-velopment (OECD), Paris

Ambassador Gherson, Canadian Ambassador to theOECD

Dr. Eric Willis, Director of Research, Development andApplication of Technologies. International EnergyAgency

Solar Furnace, Odeillo, Pyrenees Orientates

Centre National de la Recherche Scientifique (CNRS)

ICELAND

Ministry of Energy and Industry

Pall Flygenring, Secretary General of Ministry ofEnergy

Hon. Hjorleifur Guttormsson, Minister

National Power Company, Reykjavik

Johann Mar Mariusson, Head of Engineering

State Electric Power Works, ReykjavikSteiner Fridgeirsson, Head of Planning DivisionKristjan Jonsson, Managing Director

IRELAND

Bord na Mona, Dublin

John CroweDeny Greena, County KildareBob Laird, Senior Administrative EngineerP. McEvilly, General Works Manager, Head OfficeDennis O'Rourke, ManagerTom Quinn, Manager, Clonsast BogLewis Rhatigen, Managing Director

261

Eamon KinsellaTom O'Flaherty, Kinseally Research Centre

ITALY

Dr. S. Verrie, Duomo Imports Limited, Milan

SWEDEN

Secretariat for International Aftairs

Carl Ivar Ohman, DirectorLars-Ake Erikson

Commission for Energy Research, Stockholm

Sigfrid Wennerberg

Department of Industry

Harold Hagermark

UNITED STATES

Mr. Harry Home, Canadian Consul General, SanFrancisco

Congress of the United States, Energy Researchand Production Subcommittee, Washington, D.C.

Congressman Mike McCormack, ChairmanStaff of the Subcommittee

Congressional Research Servlce,Washington, D.C.

James E Mielke, Analyst in Marine and EarthSciences

J. Glen Moore, Analyst in Energy TechnologyLani Hummel Raleigh, Energy, Aerospace and Trans-

portation Section HeadMigoon Segal, Analyst in Energy Technology

Department of Energy, Washington, D.C.

C. Worthington Batemah, Under Secretary of EnergyPaul Brown, Director, Electric and Hybrid Vehicle Pro-

gram, Office of Transportation Programs, Conser-vation and Solar Energy

Ambassador Halsey G. Handyside, Deputy AssistantSecretary for international. Nuclear and TechnicalPrograms, International Affairs

James S. Kane, Associate Director for Basic EnergySciences, Energy Research

Richard Passman, Director, Office of Coal ResourceManagement, Resource Applications

Michael Roberts, Director of Planning and Projects,Energy Research

Jack Solsberry, Deputy Director, Geothermal EnergyDivision, Resource Applications

Joel Weiss, Executive Assistant to the Deputy Assist-ant Secretary for Solar Energy, Conservation andSolar Energy

Electric Power Research Institute, Palo Alto, Cali-fornia

Ed DeMeo, Solar and Wind Energy

Shelton Ehrlich, Program Manager, Fluidized Combus-tion, Coal Combustion Systems Division

Walt Esselman, Manager, Strategic Planning Depart-ment

Neville Holt, Coal GasificationEvan Hughes, Project Manager, Advanced Geother-

mal SystemsR. Rhodes, Member, Technical Staff, Policy Planning

DivisionRobert Scott, Program Manager, Fusion Power Sys-

tems ProgramRon Wolk. Coal Liquids

Georgetown University, Washington, D.C.

Dan FarrellG. Shaff, Power Plant ManagerS.E. Winberg, Service Engineer, Foster Wheeler

Energy Corporation

HCoal Plant, Catlettsburg, Kentucky

James K. Farley, U.S. Department of EnergyHarold H. Stotler, Technical Manager

Lawrence Uvermore National Laboratory, Liver-mere, California

Roger Batzel, DirectorJohn Cooper, Co-principal Investigator, Metal-Air Bat-

tery ProgramJohn Emmett, Associate Director, Laser Fusion

ProgramMortimer L Mendelsohn, Biomedical and Environmen-

tal Research DivisionRichard Post, Deputy Associate Director, Magnetic

Fusion Energy PhysicsErik Storm, Assistant Associate Director, Laser Fusion

ProgramKenneth Street, Associate Director for Energy and

Resource Programs

Office of Technology Assessment, Washington,D.C.

John Gibbons, DirectorLionel Johns, Assistant Director, Energy, Materials

and International Security DivisionNancy Naismith, Project Director, Energy Program,

Energy, Materials and International Security DivisionMarvin Ott. Director, Congressional and Institutional

RelationsRichard Rowberg, Energy Program Manager, Energy,

Materials and International Security Division

Pacific Gas and Electric, The Geysers GeomermalElectric Development, California

Jack Trotter, Public Activities Representative, GeysersProject

Plasma Physics Laboratory, Princeton University,Princeton, New Jersey

K. Bol, Head, Princeton Demonstration Experiment(PDX)

H.P. Furth, Program DirectorM.B. Gottlieb, Director

262

APPENDIX E

D.M. Meade, Head. Experimental DivisionR G. Mills, Acting Head, Engineering ProgramP.J. Reardon, Associate Director f or TechnologyR.A. Rossi, Associate Director. AdministrationJ.A. Schmidt, Head, Applied Physics DivisionM.L. Shoaf, Assistant Director —-;---.-.-T.H. Stix, Associate Director for Academic AffairsW. Stodiek, Head, Princeton Large Torus (PLT)

Sandia Laboratories, Albuquerque, New Mexico

B.E. Bader, In Situ Coal GasificationJames F. Banas, Line Focus Technology - - ._ ' • -R.H. Braasch, Wind EnergyWilliam W. Marshall, Supervisor, Central Receiver Test

Facility V - -A. Narath, Vice-PresidentDonald G. Schueler, Photovoltaic?James H. Scott, Director of Energy ProgramsGerald Yonas, Director of Pulsed Power Programs

Smith-Bowman Distillery, Reston, Virginia

John B. Adams Jr:, Vice-President ~ - - i ^ _

Solar Energy Research Institute, Golden, Colorado

Denis Hayes, DirectorKen Touryan, Deputy Director arid Head of Research

and Development

Analysis and Applications Directorate

Charles Berberich, Information Systems DivisionRoy Bracken, Interi—^onal DivisionDean Eaton, Inter..a. jnal DivisionMurrey Goldberg, International DivisionJames Howe, International DivisionHenry Kelly. Head

SPM Group Incorporated, Englewood, Colorado

Konrad Ruckstuhl, ChairmanRobert D. Schmidt, President

WEST GERMANY

His Excellency Klaus Goldschlag.'Canadian Ambassa-dor to West Germany, Bonn

Federal Ministry of Research Technology, Bonn

Herr Jacobs, Non-nuclear Energy ResearchDr. Marcus, Coal TechnologyWolf J. Schmidt-Küster, Head of Department

Ruhrkohle Oel und Gaz, Duesseldorf

Herman G. Krischke.ProjectManager, Fluidized BedCombustion

Josef Langhoff, Director

STEAG Corporation, Essen and LOnen

Dr. Reimer FuchsDr. Hein, Lünen Coal Gasification PlantHerr Schuster, Essen, Boltrop Gelsenkirchen District

Heating System

263