While the government’s drive to reduce greenhouse gas (GHG) emissions and different carbon trading or carbon tax regimes across the country are providing challenges for the energy industry, people here and around the world still need Canadian energy, even in a lower-carbon environment. And right now, propane is an investment opportunity and a gamechanger for consumers and for our country.
It may seem appropriate for governments to encourage consumers to move towards electrification and renewables, but we need to remind ourselves that not all electricity produced in Canada is without GHG emissions and not all electricity or renewable energy is yet affordable. And while it is imperative that we continue to lower our carbon impact, propane is part of the solution. It is a viable, reliable and ready-to- go solution for reducing GHG emissions, especially considering alternative energy sources can face a number of barriers including location, storage, high cost to produce and use, and intermittent supply.
The Canadian Propane Association is focused on key areas where propane can make an immediate and significant difference to lower our environmental footprint without the exponential infrastructure costs of other alternative fuels: rural, remote and Indigenous communities, transportation, and economic development.
Rural, Remote & Indigenous Energy Solutions
Easily transportable, safe and abundant, propane is well-positioned to reduce GHG emissions in the residential sector in rural and remote communities and in particular, where natural gas or clean electricity is not available, while also lowering energy costs for homeowners.
According to Statistics Canada, nine per cent of homeowners still use oil. Every 1,000 homes that convert from heating oil to propane will have the equivalent annual GHG reduction impact of removing 661 cars from the road. Clearly, governments need to support this transition to achieve their targets.
In northern Canada, Indigenous and remote communities face unique challenges in addressing their dependence on diesel and furnace oil. These communities experience local air and noise pollution, blackouts, supply issues and fuel spills. There are many who suggest that renewables are the solution to replace diesel. Propane can support this necessary change on a large scale in a practical and affordable manner and to a degree that will allow these communities to grow and foster economic development. Until technology is developed for long-term storage of solar or wind energy sources, for now, there will continue be a need for traditional but less carbon intense fuel sources such as propane, whether as a contributing or anchor source.
Propane can be a game changer for the transportation sector, Canada’s second largest GHG emitter. Auto propane is a cost-effective, globally-trusted and low-emission option with economic and environmental advantages. For businesses, solutions that are currently available, such as electric, natural gas and hydrogen, are often limited by a combination of range restrictions, power limitations and prohibitively expensive infrastructure.
Propane for vehicles is used in the private and public sectors throughout Canada, including by UPS, Canada Post, FedEx, New Westminster Police, Airways Transit, Air Canada Ground Services, school bus operators, including those in Calgary, Medicine Hat, Regina, Hamilton and Parry Sound, as well as many taxi and limousine operators.
Up-front cost is one of the biggest barriers for fleet operators considering conversion to propane. Financial assistance from government, via rebates or tax breaks, can lower the payback of vehicle conversion costs – the time it takes for fuel savings and rebates to cover the cost of conversion – to well under one year. Targeted subsidies from governments to increase the uptake of propane as an automotive fuel will lead to emission reduction.
The government can further reduce emissions and cut costs by introducing propane vehicles into its fleet, as many government vehicles are prime candidates for conversion. A government move to propane vehicles will save taxpayers money and further encourage growth in the auto propane market, creating economies of scale in the conversion, fuelling and equipment sectors.
Exporting Propane to Reduce GHG Emissions
Canada’s abundant propane supply provides untapped export potential to reduce global emissions in high carbon-emitting nations, such as China. According to the World Health Organization, about 4.3 million people die prematurely annually due to exposure to household air pollution caused by traditional fuels.
Propane export terminals on the west coast–one currently being constructed by AltaGas and the other recently approved by Pembina–are game changers for our country. Right now, the U.S. is reaping the benefit of exporting a large percentage of their propane to the Asian market but moving forward, Canada can get into the game. The Asia-Pacific basin is one of the world’s largest and fastest growing energy consuming regions; it is a crucial time for Canada to support our efforts and investment. Propane is a viable solution – it is safe, portable, efficient, accessible and clean-burning.
Creating Economic Value for Canadians
We have significant amounts of propane – a natural raw material with many useful applications, including manufacturing. But we only use about 50 per cent of the propane we produce, sending the majority to the U.S. where, in addition to home heating and industrial applications, they create added value by turning it into polypropylene pellets, an important feedstock for plastic products, and then ship it back to us.
Alberta’s Petrochemical Diversification program has the potential to return that value to Canadians. The two petrochemical facilities in central Alberta–one currently being constructed by Inter Pipeline and the other continuing to progress front end engineering design by Canada Kuwait Petrochemical Corporation–are gamechangers for Canada. These facilities will not only create value by establishing a new petrochemical supply stream for our propane, but they could eventually attract plastic manufacturers to Alberta. The potential from spin-off industries is substantial. These petrochemical projects provide the opportunity to develop important new markets for western Canadian oil and gas producers, as well as the province through increased regional economic activity and taxes.
Propane is a ready-to- go solution for some of the major economic, energy and environmental challenges facing Canada. With wise policy direction and limited additional spending, propane can continue to provide a low-emission and affordable fuel and significant economic advancements for Canadians.
Nathalie St-Pierre is the President & CEO of the Canadian Propane Association, www.propane.ca.