XYLENE POWER LTD.

LETTER TO MINISTER OF ENVIRONMENT AND CLIMATE CHANGE, CANADA

June 23, 2016

To: Hon. Catherine McKenna,
Minister of Environment and Climate Change,
Environment and Climate Change Canada,
200 Boul. Sacre-Coeur, 12th Floor,
Gatineau, QC, K1A 0H3

Re: Sustainable Non-Fossil Energy Development in Canada to Mitigate Climate Change

Dear Madam Minister:
We are responding to invitations for advice regarding how the governments of Canada and Ontario should address the problem of climate change triggered by fossil CO2 emissions.

Attached hereto is a document which outlines multiple measures that the governments of Canada and its provinces should vigorously pursue to reduce fossil CO2 emissions. This document has been prepared with input from a multiplicity of senior physicists and power system engineers.

The options for meaningful government response fall into five categories:
  a) Public education in the physics of thermal runaway triggered by excess atmospheric CO2. The Canadian public must rapidly become much more aware of the scope and pressing danger of the excess CO2 problem in order to support the necessary corrective measures;
  b) Displacement of fossil fuels with renewable energy;
  c) Displacement of fossil fuels with sustainable, safe and environmentally acceptable forms of nuclear energy;
  d) Repricing of electricity to properly value electricity system resources and thus enable energy storage and fossil fuel displacement;
  e) Modification of hydro-electric agreements to maximize use of available non-fossil energy for displacement of fossil fuels.

With respect to section numbers on the attached document the most urgent matters are #1, #7, and #11 through #14. Most of the contemplated CO2 emission reduction measures can be addressed within the scope of existing approved funding and hence should be vigorously pursued forthwith without further delay. There are also essential legislative changes relating to electricity and nuclear energy that must be given the highest possible implementation priority by both the federal and provincial governments.

We would welcome the opportunity to present further details about these matters and the required supporting legislative changes to senior officials of:
  Canadian Ministry of Environment and Climate Change;
  Canadian Ministry of Natural Resources;
  Canadian Ministry of Industry, Science and Technology;
  Committees of Parliament;
  Committees of the Senate.
  Ontario Ministry of Energy;
  Ontario Ministry of Environment

Contemplated presenters would include:
Charles Rhodes, P.Eng., Ph.D. - 43 years as professional engineer specializing in energy, electricity and climate change related matters
- designer of a liquid sodium cooled 2000 MWt Fast Neutron Breeder Reactor

Peter Ottensmeyer, Ph.D., FRSC - over 40 years as Professor/Professor Emeritus of Medical Biophysics at the University of Toronto. Lead proponent of the Ottensmeyer plan for reusing and eliminating spent CANDU reactor fuel by recycling it as fuel in liquid metal cooled fast neutron reactors. The Ottensmeyer Plan features an over 100 fold improvement in energy recovery from natural uranium and a 1000 fold reduction in spent fuel toxic lifetime.
 

Please confirm in writing receipt of this document.

Sincerely,

Charles Rhodes, P. Eng., Ph. D.
Xylene Power Ltd.
Charles.Rhodes@xylenepower.com
Telephone: 905 473 1704
 

1) PUBLIC EDUCATION:
The first issue is for the government of Canada to promote education of Canadians relating to the physics of climate change, the full magnitude of the global warming problem and the scope of the required corrective action. Broad public support is essential for implementation of the requred corrective measures.

(a) Global Warming and Thermal Runaway:
Prior to the industrial revolution the energy gained by Earth from absorbed solar radiation was balanced by the energy lost by Earth via thermal infrared radiation.

Global warming is initiated by an excess CO2 concentration in Earth's atmosphere. The excess CO2 concentration, in combination with water vapor, reduces the thermal infrared radiant energy emission by Earth. The resulting net energy (heat) accumulation by Earth causes: melting of ice in glaciers, permafrost and polar ice caps, release of trapped methane (CH4) and thermal expansion of oceans. The single most dangerous effect is that the melting of ice crystals in clouds and on Earth's surface reduces the solar reflectivity (Bond albedo) of Earth accelerating the rate of net energy absorption. Unless combustion of fossil carbon promptly ceases the rate of net energy absorption (warming) will accelerate until all the ice melts.

Photographs and far infrared spectra of Earth from outer space show that as the ice melts the Bond albedo of Earth will drop from about 0.30 to about 0.10 causing the effective thermal emission temperature of Earth to rise by about 17 degrees C. This rapid transition from a "cool" state to a "warm" state is known as thermal runaway.

(b) Dire Consequence
The fossil and isotope ratio sedimentary record from points around the world shows that a similar high atmospheric organic CO2 concentration at the time of the Paleocene Eocene Thermal Maximum (PETM) 55 million years ago triggered atmospheric thermal runaway. The resulting "warm" state caused a global extinction of all land animals larger than a mole. Natural bio-chemical processes took over three hundred thousand years to return Earth to its normal "cool" state.

If similar thermal runaway is to be avoided there is no time for further delay. The on-going rise in atmospheric CO2 concentration must be reversed right now because the alternative is human extinction. This issue must be communicated to the public both in Canada and around the world.

(c) Response Delay:
One really worrisome aspect of global warming is its response delay. This delay is a trap inducing political inaction. Even after fossil CO2 emissions are completely stopped the excess atmospheric CO2 concentration will take at least an additional 40 years to decay noticeably. During that period ice will continue to melt, further reducing Earth's solar reflectivity and hence further increasing the rate of net energy absorption and the certainty of thermal runaway.

When the increase in the rate of net energy absorption caused by ice melting exceeds the available decrease in the rate of net energy absorption due to a natural decline in the atmospheric CO2 concentration Earth's atmosphere will enter a period of thermal runaway which will accelerate until infrared radiant energy emission at a higher Earth temperature rebalances the solar energy absorption by Earth with no ice. It can be argued that if mankind is presently not ready, willing and able to immediately cease fossil CO2 emissions then Earth is already in the initial stages of thermal runaway.

(d) Methane Release
As higher temperatures reach further toward the poles a major concern becomes melting of the permafrost with the release of large quantities of methane (CH4). On a per molecule basis methane is a more powerful green house gas than CO2.

(e) Immediacy
It is not sufficient to simply reduce use of fossil fuels. eg A switch from coal to gas or use of natural gas together with wind generation. The atmospheric CO2 concentration, which is presently increasing, must be reduced as rapidly as possible. This reduction can only be achieved by completely stopping combustion of fossil fuels for energy production. This is a blunt reality that persons in decision making capacities must face. One of the most practical ways of keeping fossil fuels in the ground is to prevent them being transported by large truck, pipeline, railway or ship.

(f) Employment Transfer to Nuclear/Electricity Sectors
Fossil fuels must be completely displaced by renewable and nuclear energy. Persons presently employed in extraction and transportation of fossil fuels must be retrained for work in the nuclear, electrolytic hydrogen (eg fuel cells, methanol), electricity and renewable energy sectors and in climate change adaption projects. Expanded employment in the non-fossil energy sector should mitigate economic hardship related to shut down of fossil fuel production and consumption. Financial capital must be transferred from the fossil fuel sector to the nuclear, electrolytic hydrogen and electricity sectors.

It is important for the public to understand that the energy storage and transmission required by renewable energy sources to supply dependable base load (steady 24 hour per day) energy flow and the impact of that energy storage and transmission on aboriginal populations are an order of magnitude (10 X) larger than the corresponding energy storage, transmission and impact for nuclear energy.

(g) Relative Cost of Energy
If only renewable energy is used the average cost per unit of delivered energy is about five fold larger than the corresponding average cost of delivered nuclear energy. The choice between renewable energy and nuclear energy should be made on the basis of which non-fossil energy form is affordable in a particular circumstance. Renewable energy sources are best aligned with loads that can use the energy when nature provides it. Base-load demand is best met by dependable non-fossil energy sources such as nuclear and hydro electricity. Even with an economically optimal mix of energy forms government and private sector resources will be stretched to their limits to meet the challenge of climate change.

(h) An Educational Big Stick
The federal government provides funding for higher education. The provincial governments provides funding for all levels of education. A condition for receipt of that funding should be that the aforementioned energy and climate change matters must become core curriculum material at any educational institution that receives government funding. The term Thermal Runaway, its meaning and its consequences are presently almost totally unknown to the Canadian public.
 

2) WORLD POPULATION DISPLACEMENT:
In the coming decades Canada will become a favored destination for immigrants seeking to escape rising temperatures and increasingly violent storms at lower latitudes. The present problems with uncontrolled migration into Europe from Africa and the Middle East and into the US from Mexico and Central America are only a tiny foretaste of the future. Reversing the present ongoing increase in atmospheric CO2 concentration immediately will mitigate large scale population dislocations in the decades ahead.
 

3) INTERNATIONAL RELATIONS:
In addition to educating Canadians it is essential that the Canadian government set an example for other nations as to how to best address climate change matters. There will be tough decisions relating to immigration policy because under the best of circumstances the high latitude countries can only support a small fraction of the present total world population.
 

4) THE SCOPE OF THE PROBLEM:
Data from the National Energy Board shows that over 80% of the gross energy consumed in Canada presently comes from combustion of fossil fuels. The problem of CO2 emissions in Canada and elsewhere cannot be solved by further investment in fossil fuel infrastructure. The sooner that all parties face this blunt reality the better. Any further commitment of capital to fossil fuel infrastructure by either the public or the private sector is inherently a waste of scarce resources.
 

5) IMPORTANT NON-ENERGY HYDROCARBON USES:
Even if there is no intentional combustion of fossil fuels for energy production fossil hydrocarbons will still be needed for critical applications including production of steel, resins, tar, solvents and asphalt. The required volumes of these commodities can be adequately transported by rail and ship. Cement production must continue which is by itself a major contributor to fossil CO2 emissions. To the extent practical use of carbonate rock (limestone) in cement should be minimized.

To reverse the present trend of increasing atmospheric CO2 concentration it is essential for industrial societies to immediately reduce their fossil CO2 emissions by about 90%. Almost all of the remaining 10% must be allocated to cement and steel production. Uncontrolled natural oxidation of fossil carbon contained in existing paints, resins, roofing materials, tar and roadway asphalt will use up all of the remaining fossil CO2 emission allocation leaving no fossil CO2 emission allocation for any other purpose.

The practice of burning municipal hydrocarbon waste must end. The hydrocarbons in this waste should either be buried or converted into useful resins.
 

6) TRANSPORTATION FUELS:
Aircraft must be fueled by synthetic liquid hydrocarbons made from biomass and electrolytic hydrogen. Ships can be fueled by liquid ammonia, or by sodium-chlorine. Commuter trains can be powered by electricity or electrolytic hydrogen. Transcontinental trains and large trucks can be fueled by liquified electrolytic hydrogen. We already have battery and compressed hydrogen powered automobiles. Luxury automobiles could still be powered by bio-methanol or synthetic gasoline, but synthetic liquid hydrocarbon fuels for automobiles will have to financially compete with aircraft, emergency power plants and small engines (eg chain saws, lawn tractors, outboard motors) for a bio-carbon allocation.
 

7) CAP AND TRADE VERSUS CARBON TAX:
There has been much discussion about cap-and-trade versus a fossil carbon emissions tax. The simple reality is that in almost every jurisdiction where cap-and-trade has been adopted there has been political or other self-interest abuse that has rendered the program ineffective. A simple and transparent fossil carbon emissions tax such as has been implemented by BC is much more effective than cap-and-trade and develops essential public confidence. The government of Canada should encourage jurisdictions both inside and outside Canada to adopt a fossil carbon emissions tax based on the BC model. Cap-and-trade has simply become an excuse for inaction. The government of Canada needs to encourage adoption of alternatives to fossil carbon by implementing a fossil CO2 emission floor price that rapidly rises to about $200 / tonne.
 

8) ELECTRICITY GENERATION AND TRANSPORTATION:
All significant forms of non-fossil energy inherently involve electricity: generation, transmission and distribution. Hence as a minimum displacement of fossil fuels requires about a five fold expansion of the electricity system capacity. Whether generation is via distributed diffuse intermittent renewable sources or via new load following nuclear plants governments must face the realities of building the required additional non-fossil electricity generation and expropriating sufficient high voltage energy transmission corridors.
 

9) HEAT PUMPS AND BATTERIES:
There are some parties that argue that the required expansion in electricity system capacity can be reduced from five fold to three fold by widespread application of heat pumps in the building heating/cooling sector and by widespread application of lithium batteries in the transportation sector. However, the cost of the equipment and supporting infrastructure necessary to implement the contemplated widespread application of heat pumps and lithium batteries will likely exceed the alternative marginal cost of expanding the electricity system capacity. For example, the cost of a ground source heat pump system increases the initial cost of a detached single family home by about $80,000 and the cost of lithium battery powered vehicle with performance comparable to a gasoline powered vehicle more than doubles the initial cost of that vehicle. Similar cost tradeoff considerations apply to district heating systems.
 

10) RENEWABLE ENERGY MATTERS:
(a) Inherent Intermittence
Displacement of fossil fuels by renewable electricity generation has additional demanding complexities. Fossil fuels inherently store energy and provide thermal power on demand. Renewable energy in Ontario is only available at times when there is seasonal river runoff, when the wind blows or when the sun shines. In order for renewable energy to be used to displace fossil fuels almost all of the renewable energy harvested must be stored for use at a later time. The technologies that can store large amounts of energy for later use are inefficient. The best renewable energy storage system in terms of capacity, storage time and efficiency is a high hydroelectric dam with a large reservoir, but the necessary geography for such dams and reservoirs is mainly in BC and Quebec. Expansion of hydroelectric energy storage capacity is further complicated by aboriginal land rights, fishery issues and the need for long high voltage electricity transmission corridors.

(b) Other Energy Storage Options
There are other energy storage technologies but they all have serious limitations. Thermal energy storage systems, which are appropriate for building heating-cooling applications, provide efficiencies of 80% to 90% and offer energy storage times measured in hours. Battery systems, which can provide energy storage for hours to several days, have efficiencies of about 65%. Hydrogen based energy storage systems, which can potentially provide energy storage for up to several weeks, are about 35% efficient. Other chemical energy storage systems, based on high energy content chemicals such as ammonia, sodium and chlorine, can provide seasonal energy storage at an efficiency of about 25%. These chemicals, which have a high potential energy density, are also highly toxic. For the purpose of order of magnitude calculations it is reasonable to assume that the average efficiency of renewable energy storage is about 50%. Hence if we are to rely only on intermittent renewable energy for displacing fossil fuels the electricity system capacity has to be expanded at least nine fold. That is a cost issue that is not adequately appreciated by renewable energy advocates, politicians and most of the Canadian pubic.

(c) Solar Capacity Limitation
The next issue is: "Where is the non-fossil energy to come from?" Solar panels have fallen considerably in price. However, even if the roof of every building in Canada is completely covered with high efficiency solar panels the total energy harvest is less than 10% of the total energy requirement. There are also the problems of snow, ice, low daily capacity factor and seasonal sunlight.

(d) Aboriginal Land Requirements
Aboriginal populations rely on wild life that naturally concentrates in river valleys. There is relatively little opportunity for large scale hydraulic energy storage expansion without substantial displacement of aboriginal populations, and even so the resulting increase in non-fossil energy supply would not be sufficient to meet the total energy needs of BC and Quebec, let alone the rest of Canada.

(e) Excess Wind Energy Without Storage
Practical experience with wind generation in Ontario has demonstrated that wind generation is poorly co-related with electricity demand unless it is complemented by seasonal energy storage, which is presently almost nonexistent in Ontario. In Ontario there are summer periods as long as ten days when province wide the wind generation is close to zero. The average wind generation in the summer is only about half the average wind generation in the winter. During the prolonged low wind periods the entire wind generation capacity must be replaced by reliable nuclear generation. To meet the energy requirements of the transportation, industrial and residential sectors with non-fossil energy Ontario must build load following nuclear generation anyway. Then why should Ontario bother with unreliable wind generation? A compromise is for Ontario to exchange wind energy with Quebec to take advantage of Quebec based hydraulic energy storage. However, the costs of the required extra hydraulic generation capacity in Quebec and the required lengthy electricity transmission corridors in Ontario are very high and may not make economic sense for either province in the long term. An important related issue is appropriate valuation of electricity at the inter-provincial border, in which matter the federal government might play an important role.
 

11) NUCLEAR MATTERS:
(a) Some CANDU Reactor Characteristics
Apart from large scale hydroelectric power the only dependable major source of non-fossil electricity is nuclear generation. At present over 60% of the grid supplied electricity in Ontario comes from a fleet of 18 CANDU nuclear reactors of ages ranging from 24 to 45 years. An advantage of CANDU reactor technology is that it uses natural uranium and has provided Canada with a means to produce vast amounts of dependable electrical and thermal energy at costs comparable to present energy rates, without depending on other countries for uranium enrichment services. This independence should be preserved. CANDU reactor technology has served Ontario well but today the technology is becoming obsolete as advanced passively safe nuclear reactors are being developed by other nations. The major CANDU design decisions were made circa 1965 and since then the science underlying nuclear power generation has advanced. The major problems with CANDU reactors are:
i) CANDU reactors harvest only about 0.75% of the potential energy available from natural uranium and produce 4 to 5 times more spent fuel waste as compared to U.S. enriched uranium reactors. In CANDU's favor is the fact that this 0.75% ia about 30% better than other types of water cooled reactors. If we are to rely on nuclear energy to sustainably replace fossil fuels we must adopt a nuclear power technology that is much more efficient in its use of natural uranium.
ii) The spent CANDU reactor fuel is less toxic than waste from enriched uranium reactors but is still highly toxic and will remain so for at least 400,000 years unless the spent fuel is reprocessed and recycled through fast neutron reactors that consume the long lived high atomic weight radio isotopes. Fast Neutron Reactors (FNRs) exist and have been successfully operated for over 30 years;
iii) CANDU reactors are inherently expensive to maintain because the zircaloy fuel channels and related fittings operate at a high pressure and are subject to ongoing fretting and neutron damage. Typically these fuel channels and their surrounding moderator tubes are replaced at 20 to 30 year intervals at a cost of 2 to 3 billion dollars per reactor.
iv) A typical CANDU reactor contains 4560 fuel bundles. These fuel bundles are replaced, 8 to 12 fuel bundles per day, while the reactor is running at full power, so the average working life of a CANDU fuel bundle is about 1.5 years. A benefit of this arrangement is that the excess reactivity in the reactor is minimal, making CANDU reactors extremely safe.
v) Due to transient formation of Xe-135 CANDU reactors can only execute rapid output power changes via a process known as steam turbine bypass. Use of this process reduces the reactor thermal efficiency and wastes fuel.
vi) The operating temperature and hence the thermal efficiency of a CANDU reactor are constrained by the allowable wall thickness of the reactor pressure tubes that contain the high pressure hot reactor cooling water.

(b) Transition to Load Following Fast Neutron Reactors
For all of the aforementioned reasons it is essential for Canada to gradually transition from CANDU reactor technology to a high efficiency passively safe reactor technology. The most suitable proven technology is a liquid sodium cooled Fast Neutron Reactor (FNR). Therein lies a political mine field. In 1966 Atomic Energy of Canada Limited (AECL) was the world leader in fast neutron power technology. In 1966-67 the Liberal government of the time defunded the AECL fast neutron technology team. About 50 leading Canadian scientists and engineers left AECL. A few went to TRIUMF in BC. Some of them including Chuck Till (Saskatchewan) went to the USA and joined the US Integrated Fast Reactor (IFR) development team in Idaho. This team, including Walter Zinn (Kitchener), developed the EBR-1 and then the highly successful liquid sodium cooled integrated fast reactor known as the EBR-2 (Experimental Breeder Reactor 2), which operated up until 1994 when it was defunded by then US president Bill Clinton as being "unnecessary" because at that time nuclear power expansion, nuclear fuel efficiency and nuclear waste disposal were not viewed by the US electorate as being pressing issues. Today lead proponents of liquid sodium cooled FNRs include GE-Hitachi (GEH), Eric Loewen and Peter Ottensmeyer. Other proponents include Charles Rhodes and OSPE (Ontario Society of Professional Engineeers).

(c) Some Fast Neutron Reactor Characteristics
The major features of a modern liquid sodium cooled fast neutron reactor (FNR) are:
i) A greater than 100 fold improvement in the efficiency of utilization of natural uranium as compared to a CANDU reactor if fuel recycling is included in the FNR design;
ii) A 1000 fold reduction in the toxicity lifetime of 94% of spent fuel as compared to existing CANDU and enriched uranium reactors;
iii) Use of low pressure liquid sodium primary coolant instead of high pressure water reduces the size and mass of the required containment structure;
iv) Primary coolant operation at 480 dgrees C in a FNR as compared to 300 degrees C in a CANDU reactor improves the thermal to electrical conversion efficiency;
v) Avoidance of production of long lived low atomic weight isotopes;
vi) Significantly reduced maintenance and inspection issues as compared to CANDU reactors;
vii) A useful fuel lifetime of up to 30 years as compared to 1.5 years for a CANDU reactor;
viii) Fuel for the first four 2000 MWt FNRs can be obtained by reprocessing the existing stock of spent CANDU fuel;
ix) A much longer working life than a CANDU reactor due to separation of nuclear and mechanical stresses. The high pressure parts which occur only in the intermediate heat transport loop and in the turbine/generator section of the plant are not subject to neutron damage or neutron activation;
x) Produces much less maintenance and decommissioning nuclear waste than a CANDU reactor;
xi) Can efficiently execute rapid output power changes in response to the needs of the electricity grid because the FNR is not subject to reactor poison outages from Xe-135;
xii) Will safely eliminate the long lived radiotoxic heavy atoms in 50,000 tons of spent CANDU fuel (SCF) in a few decades at reactor power levels equal to the current CANDU fleet, then maintain power for several thousnad years fueled by the depleted uranium in the spent CANDU fuel.
 

12) GOVERNMENT REGULATIONS/LAWS/POLICIES:
In order for Canada to comply with climate change requirements via adoption of FNR technology for electricity generation there must be several fundamental policy changes on the part of the government of Canada:
a) There must be recognition that the 1966-67 decision by the Canadian federal Liberal government and the 1994 decision by US Clinton administration to defund fast neutron reactor technology must be reversed. In the mean time Russia has successfully built and is enjoying the performance benefits of fast neutron power reactors.

b) There must be recognition that the policies of the previous Canadian government with respect to Canadian nuclear power technology were not helpful in mitigating climate change. The specific policies that need immediate attention are:
i) On matters of expenditures essential for nuclear safety the Canadian Nuclear Safety Commission (CNSC) must not be overruled by elected politicians;
ii) The policy of burying spent CANDU fuel instead of reprocessing it must be reversed;
iii) Development of facilities for reprocessing of spent CANDU fuel and later used FNR fuel should be a high priority for the government;
iv) The Nuclear Waste Management Organization (NWMO) mandate for long term burial of spent CANDU fuel should be revised to fund development of safe cost effective selective extraction and safe disposal or transmutation of the much smaller quantities of long lived lower atomic weight isotopes Be-10, C-14, Cl-36, Ca-41, Se-79 and Sn-126 as well as the development of safe cost effective reprocessing of spent CANDU fuel to produce FNR fuel.
v) Today there is no suitable legal and financial framework for development and implementation of FNR technology in Canada. Solving this problem may require funding of an entirely new Canadian entity for FNR development and implementation. This entity should be structured to attract long term investment by insurance and pension funds.
 

13) SURPLUS NON-FOSSIL ELECTRICITY:
(a) Available Unused Non-fossil Energy
In electricity utilities with a major fraction of non-fossil generation, in order that there be enough generation to meet the annual peak grid load plus reserve, for most of each year there is surplus non-fossil generation capacity, which is constrained (dumped over dam spill ways) or is sold at a very low price into the export market. This issue should be addressed by a national requirement that all surplus non-fossil electricity generation capacity be supplied to Canadians as low cost interruptible electricity for fossil fuel displacement or mineral extraction in preference to being constrained or exported. Today with the internet and electronic interval electricity meters the technology for providing an interruptible electricity service on the same account as a standard electricity service is widely available.

(b) Markets
The main markets for interruptible electricity are charging energy storage, displacement of fossil fuels in hybrid heating systems, production of electrolytic hydrogen as a transportation fuel or feed stock for production of bio-methanol and other synthetic liquid fuels. Such interruptible electricity would almost immediately save Ontario residents several billion dollars per annum via reduced purchases of fossil fuels and would correspondingly reduce fossil CO2 emissions. The cost savings in the rest of Canada would likely be comparable. These cost savings will increase in direct proportion to any price on fossil CO2 emissions applied to the displaced fossil fuels. This several billion dollar per annum fossil fuel consumption reduction opportunity costs little to implement and should have the immediate personal attention of the Minister of the Environment and Climate Change.

(c) Electricity Valuation
It is crucial for the public to understand that in a non-fossil world electricity must be priced based on peak monthly kW or kVA usage, not kWh consumption. Low emission electricity systems should price electricity based on the fixed cost to supply peak monthly kW or kVA and allow customers to use all the available zero emission electrical kWh to displace fossil fuel consumption by charging only the variable cost of production for the zero emission kWh. Otherwise energy storage cannot financially be justified. Without energy storage renewable generation cannot dependably deliver power to consumers and the delivered cost of nuclear energy rises. This revaluation of electricity is the most important single step for governments to take because it would direct the power of the market toward using all available non-fossil electrical kWh for displacement of fossil fuels.

(d) Federal Direction
This issue needs federal direction due to existing provincial policies that price retail electricity based on kWh consumed. This pricing methodology is appropriate for a fossil fuelled electricity system but is not appropriate for a low emission renewable and nuclear based electricity system.

(e) Fossil CO2 Emission Reduction
The present electricity pricing system is a result of a century of dependence on fossil fuels for electricity generation. The present electricity pricing system encourages use of fossil fuels in preference to use of zero emission low marginal cost electricity. Realizing fossil CO2 emission reduction through efficient use of all presently available non-fossil electrical kWh would be a large step forward for which the present governments could rightfully claim credit.
 

14) GUIDING PRINCIPLES WITH RESPECT TO ENERGY SUPPLY:
We recommend that the government thinking be guided by the following key principles:

(a) base-load energy must be provided by dependable non-fossil base-load generation in order to keep energy costs and emissions as low as practical. Energy cost is important because it affects the price of all goods and services and therefor affects disposable income. That in turn affects economic activity and jobs.

(b) intermittent energy sources, like wind and solar, require backup to make them dependable. Backup sources either produce significant CO2 emissions (like coal and natural gas) or they are expensive (like storage or curtailed production from hydroelectric or nuclear generators). We should use intermittent energy opportunistically by matching it with load that is flexible enough to be brought in and out of service as intermittent energy is available. Grid operators call this type of load "dispatchable". Many fossil fuel loads in various sectors of the economy can be partially displaced by dispatchable electricity if electricity is priced in a way that enables intermittent displacement of fossil fuels.

(c) to achieve our emission reduction goals, we need to encourage consumers to maximize the use of non-fossil energy sources and reduce their fossil fuel use. Today we have several technologies with which to make non-fossil zero emission electricity. We need to encourage efficient use of all of this non-fossil electricity. To do this we need to price electricity as follows:
(i) allocate the entire fixed cost of electricity generation to a consumer's share of power system peak capacity used (kVA for medium and large customers and kW for small customers) rather than energy used (kWh).
(ii) allocate the marginal cost of producing electricity to a consumer's use of kWh (currently less than 1 cent/kWh for non-fossil electricity).
(iii) waive the capacity charge at times when non-fossil electricity is significantly surplus to actual demand to further encourage displacement of fossil fuels by non-fossil electricity (this is at no cost to the power system).
 

15) HYDROELECTRIC MATTERS:
(a) Columbia River Treaty
The federal government should concern itself with the terms of renewal of the Columbia River Treaty, which may have many energy and energy storage implications for BC and Alberta stretching far into the future.

(b) Boundary Water Treaty
The federal government should concern itself with Boundary Water Treaty matters as they affect short term water flow in the Niagara River. In order to balance wind generation Ontario will need to make short term changes in the Niagara River flow that are larger than the flow changes contemplated in the existing treaty. In order to support the St. Lawrence Seaway the average river flow must be maintained. However, Lake Erie and Lake Ontario together provide a gravity energy storage system that is presently overly constrained by the Boundary Water treaty terms. As fossil fuel electricity generation is reduced in the USA electricity utilities in the USA will experience similar problems as does Ontario, with effectively utilizing a higher penetration of renewable energy sources, so they will likely be co-operative with respect to amending the Boundary Water Treaty terms relating to short term variations in the Niagara River flow.

(c) Peace River Site C
The federal Liberal government faces a difficult decision with respect to Site C on the Peace River. That site can potentially provide a large amount of reliable renewable energy and companion energy storage for BC and Alberta. However, the federal Liberal party has also made conflicting undertakings to aboriginal organizations. There is no simple resolution to this problem. An issue that must be faced is that absent Site C BC and Alberta will have to build nuclear reactors sooner rather than later to comply with climate change requirements. The best solution may be a generous offer to the affected aboriginal organizations. The potential benefits of Site C are multi billion dollar in size so the offer to the affected aboriginal peoples should reflect that reality. Site C may also be a financial model for other remote hydroelectric sites elsewhere in Canada.

(d) Electricity Valuation at Borders
The federal government will have to tackle the issue of the value of electricity at provincial borders and at the Canada-US border. Historically the value of transferred electricity was based on the measured number of kWh at an agreed price per kWh, because the principal underlying cost component of most electricity generation was a fossil fuel. However, in a non-fossil world electricity should be valued based on its principal cost component, which is the cost of meeting a users monthly peak kVA co-incident with the power system peak. The marginal cost of a kWh must be relatively small to financially enable fossil fuel displacement and energy storage. This revaluation of electricity at borders involves a host of complex issues that are beyond the scope of this document. These issues may include reopening of power exchange contracts between Labrador and Quebec, between Quebec and Ontario and between BC and Washington State in the interest of reducing total fossil fuel consumption outside the electricity system without financially penalizing any party. For example, unsold electricity generation capacity in Quebec should be used for reducing fossil fuel consumption in Ontario in preference to that non-fossil energy being dumped over a dam spill-way. For maximum utilization of renewable energy, wind power when it is available, should be used in preference to hydro power and the hydraulic energy should be stored for use when wind power is not available. Operating hydro-electric dams in this way involves forecasting of wind and rainfall and co-operative actions on both sides of interprovincial and international borders. Similar considerations apply to Peace River, Columbia River and Churchill River electricity generation.
 

This web page last updated June 19, 2016