Why am I seeing headlines saying heating this winter could be expensive?
We get it — our eyes glaze over reading complex energy and business coverage too. So we broke down what you might see on your bill this winter (and why) in the simplest terms possible.
Welcome to the 51st issue of The Supplement, a newsletter that fills in the gaps of your other news intake. This is Sierra, one-third of The Supplement team!
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This week, we’re tackling this question: Why am I seeing headlines saying heating this winter could be expensive?
TL;DR: Surprise! There's an energy crisis — well, at the very least there are a lot of energy disruptions across the globe. And although headlines have died down, the effects of the situation aren’t going anywhere any time soon. The problem is caused by (you guessed it) pandemic hiccups in supply because of then low, and now resurgent demand. But it also forces us to think: is this an indicator as to how bumpy a green transition could be?
Let’s dive in.
Wait, energy crisis?
Yes, it feels like everything is a crisis these days, but there have been some genuinely concerning events happening around the world in the past month.
But first off — let’s be clear that there isn't a global shortage per se. It’s not that there isn’t any oil left in the world. Natural gas has been experiencing hiccups for a few regional reasons as well.
The main problem is that the supply currently available after months of low demand is being squeezed (remember when we couldn’t travel, or fly, or anything like that?). Now that demand is on the rise again, and supply is not back up to the usual flow.
The effects of this have been more visible in Europe, the UK and China. For example, the price of keeping the lights on in Spain tripled. In Eastern China, rolling blackouts were implemented to ration power in response to a rise in demand that could threaten world supply chains. In the UK, a lack of labour in trucking and transportation paired with panicked buyers have made shortages worse.
So like, there’s no crisis in Canada then?
Canada and the US have not seen record levels of natural gas prices like in Europe and the UK, but they’re still higher than the past six years.
That means if winter is cold (lol Canada), it could be more pricey heating our homes. And some experts expect that prices will continue to rise into the spring. For context, Enbridge Gas, which heats 75 per cent of homes in Ontario, says to anticipate up to a $44 increase depending where you are.
Something sort of helpful to keep in mind is that Canada is lucky to already have a diverse range of energy sources. About 60 per cent of our energy comes from hydro and 15 per cent from nuclear. Also around 65 per cent of Canada’s electricity comes from renewable sources.
Pro tip: All electricity is energy, but not all energy is electricity
But Canadian natural gas storage levels are at five-year lows, which is more reason to expect paying more.
“This is definitely something that does not bode well for consumers, because if we have a cold winter and we don’t have a lot of gas in storage to rely on, that could be a concern,” said Dulles Wang in an interview with the Canadian Press. He is an analyst and director of Wood Mackenzie’s Canadian gas research team. “We do expect to see rising prices for consumers this winter.”
What does this have to do with the energy transition?
As a current example: In China, to deal with the energy crunch, the use of (and investing in) coal picked back up. Despite promises to stop financing new coal projects and focus on shifting green, it seems as though the country will need to set aside its ambitions and increase coal consumption for the time being.
Coal, in case you didn’t know, produces significantly more emissions than natural gas. In some cases, it amounts to almost 50 per cent more.
In Europe, wind speeds have been below average this year, so the region has turned to a greater reliance on natural gas.
So the question becomes: is this an indicator as to how bumpy a green transition will be? If we are planning on phasing out fossil fuels, can we expect more of these events to happen?
“The transition towards carbon neutrality, it’s not going to be linear and it’s going to be messy,” said Erica Downs in an interview with The Globe. She is a senior research scholar at the Center on Global Energy Policy at Columbia University.
The question we’re left with: Can the transition to renewables be as reliable as we need it to be?
The answer, in short, is that we’ll need to figure that out no matter what. But there are lots of new technologies and solutions that have been keeping us optimistic that we’ll eventually be able to achieve our goals. Stay tuned for coverage of COP26, the UN’s annual climate summit to be held in Glasgow, where more of those goals will be discussed on a world stage.
Here’s someone to follow:
We’ve mentioned Ryan McMahon before, but now here is your reminder to follow and support him and the team at CANADALAND. Independent Indigenous journalism? Yes please to that.
Here’s a story to check out:
Big news out of Alberta recently: Calgary elected its first female mayor and Edmonton its first South Asian mayor. Jyoti Gondek, a vocal critic of Premier Jason Kenney, will replace well-known mayor Naheed Nenshi. Amarjeet Sohi, who is also the first person of colour to hold the office in Edmonton, will replace Don Iveson.
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