A new deal for energy affordability and net-zero emissions

Source: Brendan Haley | · POLICY OPTIONS · | December 1, 2023

Matching affordability with clean technology begins with a focus on the demand side of energy systems, and the impact of costs on pocketbooks.

The debate about affordability and climate change is stuck. Opponents of carbon taxes and regulations emphasize increased energy prices. Clean energy advocates argue a net-zero emissions future will cost Canadians less yet offer few guarantees to make the transition affordable and fair.

Both sides are missing out on opportunities to engage with energy consumers and deliver affordability in new ways thanks to new sustainable energy and digital technologies.

The energy infrastructures of the 20th century were built alongside an implicit social bargain with customers. Governments and/or private companies would control large, centralized energy generation, and customers would pay low energy prices. Customers were expected to buy cars and electric appliances to help promote supply-side economies of scale. Some places later experimented with energy deregulation, which focused on competition among energy suppliers rather than changing how customers use and produce energy.

A new social bargain

The quest for net-zero emissions requires an entirely new approach. Yet the old social bargain still shapes our politics and policies. Meanwhile, the centralized energy paradigm is breaking down. Large power plants run into cost overruns, whether they use fossil fuels or renewable energy like hydroelectricity. Just focusing on “bigger, cleaner” grids could be prohibitively expensive.