28 November 2013
Hon. Grant Mitchell rose pursuant to notice of October 17, 2013:
That he will call the attention of the Senate to the importance of geothermal energy in Canada.
He said: Honourable senators, I put this inquiry on the Order Paper to draw the attention of colleagues and Canadians to a very important form of renewable energy, of alternative energy, that has gotten tremendous traction, if I could put it that way, elsewhere in the world but has literally zero application to this point in Canada. It is geothermal energy, and it's represented in Canada by the Canadian Geothermal Energy Association, which they refer to themselves as CanGEA.
CanGEA is an association with a very important membership. They include, for example, Geoscience BC. They have had some support from Natural Resources Canada; CanmetENERGY; NRC Industrial Research Assistance Program; Suncor Energy, a huge energy company; Nexen; Alberta Innovates. There is Borealis GeoPower — I could go on — Pembina Institute and BC Hydro.
This is a group that is backed by some very serious energy contenders in the traditional energy industry but contenders who can see the potential for alternative and renewable energies.
Geothermal energy is almost always confused with geoexchange energy. In fact, when I was first approached by CanGEA, I thought they were an association of the industry that heats homes or small buildings by drilling down 10 feet or so and using heat pumps and heat exchangers and heating and cooling homes, but that is not the case at all. In fact, that misperception has, in part, been responsible for why geothermal hasn't any traction at all in terms of actual projects in the ground through Canadian energy incentive policies.
Geothermal is much more industrial. It involves drilling kilometres beneath the surface of the earth and finding heat sources. These heat sources aren't the same everywhere, of course. Some areas of the country and some areas of the world are better than others.
B.C. is particularly endowed with this energy source, and you can find water several kilometres below the surface of British Columbia in a number of places that can be as hot as 200 degrees centigrade, in that range.
Alberta has relatively good sources, but generally, they are not quite that hot. They still have great application for geothermal heating.
What geothermal heating basically does, its most common form of heating is what's called their binary approach. It's a closed system. They dig down several kilometres, find the water pretty much at the heat they want. They move up and down to regulate that heat, because the lower you go the hotter it gets, and the higher you go the less hot it is. They bring that water up and put it into industrial kinds of facilities that generate power.
In the United States today, 11,000 megawatts of power are generated by geothermal. To put that into perspective, pretty much all the electricity that's generated in a province like Alberta is 5,000 megawatts.
With 5,000 megawatts, again to put it in perspective, you could generate enough geothermal electricity to power Nova Scotia, Prince Edward Island, New Brunswick and all three territories. The potential for this is quite remarkable and quite huge.
The director of CanGEA, Alison Thompson, made a powerful point. She said it isn't that we should be viewing this as a threat to the energy industry, because what it would do for the traditional energy industry, for example, would be instead of the oil sands perhaps having to use natural gas or some of their products to heat the water to make the steam, they could sell all that energy, and they could use geothermal to heat the water to make the steam, and so on.
It has huge potential. The problem is that there's been this mistake. Even though one of the ecoENERGY Retrofit progams that the government has had in the past was ostensibly open to geothermal, all it ever funded, apart from other renewable sources, the more common ones of wind and solar, for example, was geoexchange. So it funded projects that heated homes, but it forgot this other industrial magnitude-type approach to energy generation, which is, as I say, geothermal.
Now, what about costs? The argument will be made that it costs a lot. It doesn't by any means, in the end, cost more — and maybe even in the beginning, really — than a current coal-fired or even gas-fired electric facility costs to build and to operate. Of course, in those cases, the fuel costs. In this case, essentially, once you have the structure in the ground and you have built it, there is no fuel cost; you just keep pumping hot water.
It costs about the same. Because it is unlike other renewable resources — for example, solar and wind, which are not consistent — because it is consistent like hydro or consistent like gas and coal-fired electricity, the power that it generates can be sold for a premium. That enhances its economics.
It is also possible for it to be sold — for it to sell carbon credits. People have sort of forgotten the power of carbon credits, but there are companies that do geoexchange, for example; clearly definable carbon credits are being sold for $9.75 a tonne in Alberta, where companies, the major emitters, have to meet certain emission thresholds or they have to pay up to $15 a tonne for each tonne that they are over their threshold.
This kind of geothermal carbon credit would sell for about $9.75 a tonne, which would be a much less expensive way of reducing greenhouse gas emissions than people often think.
It is also true that once this geothermal energy has been used to generate power in a power plant, there is also excess heat, and that heat can be sold for actual revenue to heat industrial complexes, to heat homes in a local, regional way.
It is interesting to note one example that was mentioned to me: a huge leather industry in Oregon where the heat from a geothermal plant is used to sustain a facility where alligators are grown for their leather. This kind of heat is also used for greenhouse vegetable growing kinds of facilities.
It would have a great application in the North where there is a good geothermal resource. It would displace diesel. It would not only generate power, it would be even more predictable than diesel because you can run out of diesel up there, and it would generate heat that could be used to heat the smaller communities that inevitably are in the North.
In Alberta it is interesting that there aren't the resources where you could perhaps build the equivalent of a Genesee, one of our big power plants; you could do that in B.C., but in Alberta you could build five to ten power plants for local distribution facilities.
These facilities would be relatively inexpensive. They also have the advantage of not losing a lot of power because the power does not have to be transported a long way; and in the transportation of electricity, you lose a lot of it. It is very efficient.
Let me summarize again. You get to sell the power that you generate from the heat — steam. You get a premium because it is stable — it is called an ancillary services premium, because it is stable power just like hydro power and coal and gas. You get to sell carbon credits to places like Alberta and other places in the world that need them to meet guidelines that have been imposed upon them for reducing their greenhouse gas emissions or for buying those real reductions elsewhere in the world, and you get to negotiate the price of the heat that you sell to some other end user.
Not only is this not any more expensive to build than current traditional forms of power plants, but it also has several additional forms of revenue that are not necessarily available to traditional forms of power.
The other thing is — and this is what is so great about this kind of technology for Alberta — is that Alberta is really, really good at drilling holes. I mean, that is what we do. We have drilled — I don't know if it's millions, but it probably is. Now there is an advantage in a hole already drilled. A lot of the oil that comes out of these holes — in fact, in almost every case, I suspect — is mixed with hot water. So already we have hot water capped so it will not bubble up all over the province.
Indeed, that is very interesting. This special situation is one of Alberta's advantages, as it favours the establishment of this kind of industry.
If, as a rule of thumb, you use co-produced geothermal power — that is, the power that is co-produced because you have already dug the hole — you cut the capital costs in half. So now, all of a sudden, the 5,000 megawatts of power that were built in Alberta, that to be replaced today probably could cost — I am not certain about this — but could cost in the order of $20 billion or $25 billion, could be built using geothermal power for probably about $18 billion.
To give you an example of it, it may even be more competitive. Once again, those who fear that this would mean that we wouldn't be selling or using our own gas and oil could find some comfort in the fact that, no, we would be using this geothermal power to produce and get that gas and oil out of the ground. Then we could sell the gas and oil — and I guess the end purpose is of oil companies is to do that, for revenue — and everyone would win. It is one of those win, win, win circumstances.
I raise it because it also has health consequences. I mentioned today earlier in my speech on the Throne Speech that there are tremendous health consequences to the burning of coal. As I said, the Canadian Association of Physicians for the Environment made this case very powerfully in Ontario with great success, and they are beginning to make the case across the country.
In Alberta, $300 million a year of health costs are related to the toxic emissions from coal. They cause asthma and just general pollution. Of course, that doesn't even consider the effect of greenhouse gas emissions on climate change, and in turn that effect on health. That is $300 million of extra cost due to generating power by coal. If you put that cost against coal, then the costs of geothermal power become even more appealing and certainly far more competitive.
The CanGEA is now trying to raise money, and not all that much, just a couple of million dollars, to do a special project that would be a series of workshops — it is very smartly thought out — a series of workshops where they would meet with and bring together people who are interested in geothermal and people who are experts in the energy industry in places like Alberta and begin to discuss how the transition can be made. It isn't all that great a transition from those technologies that are used every day now in the energy industry into technologies that could be used to enhance the efficiency of the development of geothermal energy.
Technologies that are used today in oil and gas exploration — it's not just oil and gas either; it is also mining where great resources exist — include hard rock, high temperature, high- pressure drilling kinds of technologies, shearing and zonal isolation — technical terms — reservoir modeling, assessment and management, high-temperature pumps, high-temperature down-hole tools, power conversion systems, heat transfer fluids, use of CO2 as a working fluid, advanced material from aerospace and defence industries, software database. These are all areas of technology where Canada —
Could I have five more minutes?
Hon. Suzanne Fortin-Duplessis (Acting Speaker): Honourable senators, shall the senator be granted five more minutes?
Some Hon. Senators: Agreed.
Senator Mitchell: This is interesting.
In any event, software databases would be another area of technology that is highly developed in the energy and mining industry that could have application for geothermal energy if the transition could be made. This very important project has been developed by CanGEA, for which they need some money, particularly from the western diversification department, would be a way we could begin to make that transition, develop a new industry, reduce carbon emissions and create new jobs. Job creation here is even greater than in the traditional energy industry, largely on the maintenance and operation side of these facilities. They are great jobs.
It is distributed power. It can be done locally. It has great economic competitiveness. It has applications in the North for our Aboriginal peoples and others. It has health benefits. It is excellent, and it just needs to be recognized, and it particularly needs to be recognized in those kinds of all too few at this-point government programs that sustain and are incentives to the development of renewable energy resources.
Hon. Ghislain Maltais: Will the honourable senator allow a brief question?
Senator Mitchell: Of course.
Senator Maltais: In the preamble to your speech, you talked about the new geothermal energy. First, this is not entirely new, although it is just now being commercialized.
You will agree that geothermal energy, independently of the earth's crust, may be profitable or unprofitable. You spoke quite a bit about Alberta and soil characteristics. From experiments done in other parts of Canada, geothermal energy can become too expensive because often the water and steam reservoirs that we find are not necessarily near cities or homes.
An experiment was carried out successfully in a school in Châteauguay. However, it should be combined with clean energy, that is, geothermal and solar energy, because the two work very well together. This is the only way to make it profitable — geothermal energy should be combined with solar energy.
Senator Mitchell: Thank you very much for your question. There are two issues. First, I think this may be an instance where "geothermal" and "geoexchange" are being confused.
I believe that there have been no "geothermal" projects in Canada, except perhaps in a few places. You are probably talking about a "geoexchange" project.
Second, there is another big problem: we do not have a map of all geothermal resources throughout the country. A map has just been produced for Alberta, but there is no map for the rest of the country. I think that Quebec will have many of these resources, and this could attract the interest of Quebeckers, who have great appreciation for the environment and are very creative and inspired when it comes to environmental exchange.
Senator Maltais: I did say at the beginning that it depends on the earth's crust. I will give you an example from the part of Quebec where I come from. In northern Quebec, there are 1,800 outfitters. To reach geothermal energy in northern Quebec, you have to dig down through the first 300 feet of the earth's crust, which is frozen, and then through the rest, which is rock. However, solar energy is much more competitive in certain regions. For example, there are major Canadian companies that have developed expertise in Africa's Sahara Desert. And contrary to what one might think, geothermal does not work there because of the soil. However, they have been able to harness a great deal of solar energy with limited means, and this has really helped soil irrigation and fueled greenhouse production of vegetables.
Senator Mitchell: The two resources probably do not compete, but geothermal has an advantage. It is always constant. With solar energy, there is a problem every night. That is a problem. But perhaps they can work together. I really like solar energy because it has a lot of advantages for the environment, Northern Quebec and the rest of Canada.