This is the second instalment in a three-part series on Ontario’s energy system. Read Part 1 here.
It’s nice to have nice neighbours. More to the point, it can be a major hassle if you don’t have them.
In the first part of this series on energy, I focused mainly on the big picture and the terminology — how “energy” and “electricity” aren’t actually the same thing. I also said that Ontario’s situation, and Canada’s more broadly, has some meaning for the war now roiling Europe, as Russia continues its invasion of Ukraine. But it might actually be fairer to say that they have lessons for us.
Let’s start with something basic but important: Ontario has a population density of 14 people per square kilometre. The European Union, which I’m using as a useful-though-imprecise stand-in for the continent of Europe generally, has a population density of 170 people per square kilometre; that’s more than an order of magnitude denser than Ontario. Sustaining that level of population requires oodles and oodles — that’s the technical term — of energy. A half-billion people can’t all stay toasty using their wood stoves without a whole hell of a lot of trees available for chopping, drying, and stacking, right?
But a modern civilization needs to burn something (or at least, it has needed to, until fairly recently). As noted in the first part, energy is everything. It allows us to stay alive, first of all, but also underpins our quality of life, which is very high in most of Europe, as it is here. Europe sustains its high quality of life by importing enormous amounts of energy. Specifically, it imports oil (roughly 97 per cent of its supply is imported) and natural gas (roughly 90 per cent), as well as a small amount of coal. For our purposes today, it’s the gas bit that’s the problem.
It’s not hard to figure out why this is a particular challenge. Europe gets a lot of that natural gas from Russia. Not all of it; Russia accounts for somewhat less than half of Europe’s total natural-gas imports, which, as in North America, are largely used for heating homes and buildings. The EU also gets a lot of its oil from Russia, and oil imports make up a larger share of its overall energy demand than natural gas. But, critically, it has decent alternative sources for oil. Europe has the physical infrastructure to bring in oil from non-Russian sources, which is why U.S. officials have been talking about securing more American and Middle Eastern oil for Europe: it can be shipped there. (It’s also why Canadian energy boosters are so frustrated at our lack of export-enabling pipelines — we can’t really do a lot more than we already are doing to keep Europe fuelled, as we lack the capacity to export much more than we already are exporting.)
For Europe, though, natural gas is different. Europe relies on pipelines for much of its gas imports, and those pipelines lead to Russia. They aren’t easily replaced.
I promised my editors a series on energy, and I’d use up all my words writing about Cold War history if I gave myself the chance. But I really do need to include a little of it: even during the final years of the Cold War, when the Western NATO military alliance and the Soviet Union (and its Warsaw Pact alliance) stood across a fortified frontier bristling with tanks, guns, and nuclear missiles during the hyper-tense 1980s, Western Europe was already importing natural gas from the-then Soviet Union. That wasn’t new. During the Reagan years, though, the Western Europeans decided to significantly increase their imports of Soviet natural gas. This was helpful for the Western Europeans, who had been rattled by the energy crises of the 1970s, and also allowed Europe to export gas-extraction technology to the Soviets, for a handsome price. On the other side of the equation, this arrangement gave the Soviets access to some hard Western currency. It was an example of bitter enemies being united in mutual need. (And, boy, were the Americans ever unhappy about this.)
Okay, one more paragraph of history: all the equations changed after the Cold War ended. Economic ties between post-Soviet Russia and newly free Europe — all of it, not just the western parts — were no longer considered strategic gambles. In the new, hopeful era, such pipelines were bonds of peace! Expanding pipelines from Russia into Europe was a way both to help the Russians rebuild their economy and to bring the once-hostile peoples of Russia and Europe together. Lest that sound too romantic, fortunes were made, too, obviously, and no doubt vast quantities of funds disappeared into pockets and secret bank accounts. But there really was a very real hope — even, alas, an expectation — by many Western leaders that the Cold War was over. Hell, that history itself had ended.
Well, history came roaring back a few weeks ago, with a barrage of Russian missiles. Europe, led by Germany, is rapidly changing both its military and energy policies in response, recognizing that dependence on a hostile country for a strategically vital commodity is a massive security risk it can no longer abide.
Russian natural gas was a cheap source of energy for Europe, and the Europeans took more and more. As mentioned above, Europe relies on imports for 90 per cent of its gas, and Russia supplies 45 per cent of that. But that’s an EU-wide average. Eastern and central Europe are lopsidedly dependent on Russian imports, and there aren’t easy options for replacing the Russian supply there. Western Europe, with excellent ocean access, can generally import more liquified natural gas (LNG) from tankers serving the global LNG market, but there isn’t a ton of pipeline capacity to move natural gas, for example, from an LNG port terminal in Spain to, say, Germany or Poland. The EU is working on a plan to cut dependence on Russian gas as rapidly as possible, but that involves — rather than just swapping out one supplier for another, as can largely be done (and is being done) with oil and petroleum products — making big efforts to reduce overall usage and find alternatives.
That’s enough of the Cold War history and the geopolitics for now; suffice it to say that Europe’s energy dependence on Russia came about for entirely understandable reasons but now poses a major strategic threat to the security of the continent (and that’s assuming things don’t get even worse!).
Ontario, to state the obvious, does not face similar challenges. Our energy situation would be the envy of many of our NATO allies, especially right now.
But … there are issues in Ontario. And the war in Europe, combined with the experience of the pandemic, ought to be forcing us to think about how we try to build resiliency into our critical systems, to the extent that’s even possible.
Some local historic context is required here. Ontario is hugely (effectively entirely) reliant on natural gas for its total energy needs (remember, energy is more than just electricity). Natural gas is a major source of energy for Ontario, both for industrial and heating applications, and also serves as the fuel for not quite 30 per cent of the province’s electricity mix (if we’re running the system at maximum — the actual percentage of our electricity being generated with natural gas is often less on days when demand is below peak and can be handled by our nuclear and hydro-electric plants).
In any case, though, natural gas is a massive slice of our energy pie. Ontario does have some untapped natural-gas resources of our own, but we overwhelmingly import supplies, as expanding gas tapping would be economically fraught and politically controversial; given the abundance of supply right now, there’s no compelling reason to take on the political and financial cost.
Until about 2008, most of our natural gas came from western Canada, though those pipelines sometimes crossed American territory before arriving in Ontario (and some of that gas flowed through Ontario and on to Quebec and Atlantic Canada). We’ll talk about that American complication in a minute! But first, the last bit of the history lesson: with the boom in natural-gas production in the United States that began around 2009, Ontario started relying more on imports from America than from western Canada, using the many pipelines that cross the U.S.-Canada border.
The picture is a little more complicated for oil. Canada, as a country, produces more oil than it consumes: we are a net exporter. Each jurisdiction varies, though — Quebec and Atlantic Canada, with their excellent ocean access, import roughly half their oil, because it’s easy and cheap, and we lack the pipelines to move huge quantities of Alberta crude to eastern Canadian refineries (that was the problem intended to be addressed by the failed Energy East pipeline proposal).
Ontario itself produces little oil — some is produced domestically (which I honestly did not know before sitting down to write this series), but only small fractions of a point, an absolute rounding error on total Canadian production. Ontario does refine a lot of oil, though. This is a historical quirk left over from when Ontario oil fields produced most of our production of raw crude, and large refineries opened here to refine it into useful petroleum products like gasoline and diesel (or heating oil, which is very similar). As Ontario’s oil fields largely dried up, pipelines brought crude from western Canadian or American oil fields to Ontario’s refineries, preserving some of the refining industry here even as the heart of the Canadian energy sector moved west to Alberta. The precise quantities of raw crude or refined petroleum Ontario gets from foreign sources can vary with market conditions, but my industry sources all told me (on background, to skip the hassle of getting approval to speak with a journalist) that we mostly refine Canadian crude, with some American, and not much else imported from further abroad — although sometimes foreign petroleum products imported to Quebec or the Atlantic could be sold in Ontario, in line with the market conditions of the moment. Otherwise, most of the petroleum we use in Ontario was refined here.
Overall, as said above, no one would want to trade Ontario’s problems for Europe’s. Still, it’s worth noting that the province is hugely dependent on energy that we import from other nations or into the province from Canadian sources piped across long distances. This is fine! It works. I’m not demanding we create some Ontario First Energy Strategy on security grounds. But if the last two years of crisis, disruption, and now literal war have taught us anything, it’s that we should at least be mindful of where our strategically essential supplies are coming from and how they get here.
And though it’s not related to a military invasion, it’s interesting to note that a foreign jurisdiction is threatening one of our supply lines. Enbridge’s Line 5, a dual pipeline that brings propane and crude from western Canada to Ontario for use and refining, has been targeted by Michigan’s state government on environmental grounds. Michigan wants it shut down, fearing the prospect of a spill into a sensitive waterway the pipeline runs under. This is a very complicated case, beyond the scope of this series, and the Canadian government is fighting in court to keep the pipeline. What is important for our purposes here is that the loss of Line 5 would be very disruptive to Ontario. And this is coming from a friendly government. Our closest ally, or at least a sub-jurisdiction of it.
We don’t need to get bogged down in the details of this specific pipeline controversy or of any of the crises of the past two years to reach one broad conclusion: since energy is essential to our civilization, we’d better be very confident our supplies are stable. Whether from natural disaster, enemy action in wartime, or even just environmental activism influencing political decisions in other jurisdictions, our energy supply could be significantly, and perhaps quite suddenly, cut. It seems unlikely, I agree. But Russia fully invading Ukraine seemed unlikely a year ago, didn’t it?
There are solutions to this: We could, for example, try to carefully route pipelines only through Canadian territory (not that our record of getting pipelines built in this country is all that fantastic). The other solution, of course, is to move away from fossil fuels for heating and industrial applications and to reduce our use of fossil fuels in the transportation sector. By like, a lot.
Is that possible? Sure. Very possible. It would also be really, really expensive and difficult.
But we’ll save that for Part 3.