Depending on your crystal ball, the lofty goal of reaching net-zero by 2050 is either a windfall for the construction sector or a complete nightmare.
The concept that transportation, manufacturing, construction and life generally will produce zero carbon emissions or at least negligible emissions in less than 30 years is a vaulted promise that has become politicized to the point of overlooking the basic realities, say critics like former banker and now energy sector analyst Parker Gallant.
The fatal flaw in the equation, they say, is there’s no plan for where the energy will come from other than claims of wind and solar which are almost useless without robust storage and at this stage, affordable, compact and high energy density batteries just don’t exist other in than the laboratory.
The sector has already seen a 17 per cent jump in material costs but post-pandemic it is set to get worse. The result will see the construction sector gifted with a bounty of high margin construction opportunities but blighted with inflated material costs, wage demands, red tape and soaring energy costs as a direct result of the politicization of energy.
As it stands, the Ontario grid alone cannot meet the demand for electricity if all those political promises of 100 per cent EVs and heating and cooling were to materialize, Gallant says, requiring massive investments in infrastructure over the next 30 years, money which has never been budgeted.
Paul de Berardis, director of building science and innovation at industry group Residential Construction Council of Ontario (RESCON), says just recently Toronto Council accelerated its net-zero plan to 2040 which means all new buildings will have to have new recharging outlets, with interior electrical heating and cooling and water heating on electric.
He says this puts pressure on Toronto Hydro to deliver the power required when all those devices come online as mandated.
“Toronto Hydro is forecasting that there will be double to three times more demand for electricity in the next 10 years. In order to meet that demand they will need about $10 billion in upgrades, all of which are unfunded at this time.”
Someone, he says, will have to come up with that money. More disconcerting is that the Independent Electricity System Operator (IESO), the agency responsible for managing the power system and planning for the province’s future energy needs, projects it will cost $27 billion to meet the political direction being imposed with a resulting 60 per cent increase in electricity rates.
While energy has long been a political football in Ontario, Gallant, a regular contributor to the Financial Post, says recent political decisions have taken that to a new level.
The City of Ottawa has also jumped on the bandwagon, he says, with a plan projected to cost $57.4 billion by 2050.
“To put that in perspective, those investments are 14.5 times the city’s current annual budget of $3.94 billion,” he says, noting the construction opportunity is as massive as the cost, but the payback is going to hit consumers hard.
“The proposal to have 1,060 megawatts of solar panels (40 per cent of what Ontario currently has) and 3,218 megawatts of wind turbines (60 per cent of what Ontario has) to supply Ottawa with the power needed to achieve net-zero by 2050 is a dream Ontarians have already suffered though,” he said referring to the Green Energy Act which has seen rates triple. “Residents in Ottawa should get ready for electricity prices to more than double every 10 years.”
On the energy generation side, the IESO says 20 per cent of the doubling of demand will be driven by EV take up starting in the early 2030s.
However, politicization of energy production further complicates things, says de Berardis, with the IESO, prodded by lobby groups, looking at phasing out natural gas which produces about 10 per cent of Ontario electricity.
This in turn is causing headaches for developers, he says, with utilities already challenged in calculating energy demands and rightsizing transformers and feeders with EVs and electric heating and cooling systems in mind.
“In Toronto, the developer is on the hook,” he says. “They have to guarantee usage and then put up a deposit. If that demand usage isn’t met then they forfeit and it can be $5 million to $10 million.”
At the same time, construction companies face carbon taxes on fuels and levies like the Clean Fuel Standard (CFS) which further adds to their costs, he says.
The question remains why LNG is being harshly treated with carbon taxes and CFS levies when the European experience shows it’s a beneficial transitionary energy over coal.
“In Europe, with the energy crisis they’ve had to turn to reopening coal plants,” he says, noting they’d be frozen without natural gas which in Germany is being supplied by an increasingly hostile Russia. “Even in Britain, which has a less cold climate than say Canada, they are turning to wood stoves for heating when it is cold because their heat pumps can’t keep up.”
For more related stories, check out our Climate Change and Construction feature below.