The pathway to net zero carbon

On our behalf, the City of Guelph Climate Change Office hired Sustainability Solutions Group (SSG) to prepare the pathway. SSG used a sophisticated computer model called City Insight, that accounted for factors like employment, vehicle movements, building codes, and industry. What they came up with is more than just a carbon reduction plan - it is a significant (and exciting) investment opportunity.

Some say that it costs a lot to care for the environment. That’s true. It also costs a lot to have an RRSP. But in both cases, you get your money back, and more.

Here are the highlights from the low-carbon pathway:

Table 1: Highlights of the low-carbon pathway
Item 2016 2050
Baseline Business as usual CEI
Energy use (petajoules) 24.3 24.6 12.1
Annual energy spending $499M $677M $405M
GHG emissions (kilotonnes of carbon dioxide equivalent) 1,104 1,032 92

 

  • In the business-as-usual case, rising population cancels out anticipated energy efficiency improvements (as was already shown in the Baseline and Business As Usual Report, part of the 2018 CEI update)
  • In the CEI case, 69.5% of 2050 energy spending is local
  • In the CEI case, continued natural gas electricity generation is responsible for the remaining GHG emissions. Possible ways to address this are:
    • New technology that we haven’t anticipated
    • Buying green electricity generated outside of of the city
    • Buying carbon credits (also called offsets)

There are 25 actions in the plan; 22 produce a positive net present value (NPV) using a discount rate of 3%. The entire program has an internal rate of return of 8.5%. Over the plan’s 30-year duration, total investment is $3.2 billion while total savings and revenues are $4.9 billion. This leaves a net benefit of $1.7 billion (note that all these figures are in 2019 dollars). Hence, the pathway can be accomplished without imposing any net cost to the taxpayer. Instead, it is an opportunity for third-party investors, offering a high rate of return with comparatively low risk.

Three of the actions have a negative NPV, so if you look at them on their own, they aren’t attractive investment opportunities. However, by rolling all actions into one program, the high-return items more than make up for the low-return ones. The blended rate of return for entire program is still quite attractive. This is a common approach in energy management programs, which combine low-return and high-return projects into a single program with a blended rate of return high enough to meet investment cutoffs.

Of the 25 actions, 21 do not explicitly involve City assets. However, City may still have some role in some of these actions. For example, in the case of electrifying the privately-owned passenger vehicle fleet,  the City could install electric vehicle (EV) chargers on municipal parking lots to encourage adoption of EVs.

We expect that the plan will create an average of 1,300 full-time-equivalent jobs over its 30-year duration.

The three actions that will contribute the most to GHG reductions are:

  1. Installing heat pumps (air and ground source)
  2. Replacing internal combustion engine personal vehicles with EVs
  3. Producing as much renewable natural gas as possible

Some actions will produce co-benefits. These were not included in the calculations, and will improve the economic case. For example, we expect that increased transit will help with economic development by attracting and retaining business. Some enterprises struggle to attract and retain qualified staff, since there is very low unemployment in Guelph. These businesses need to look beyond Guelph to find employees. If they don’t drive, and transit is inadequate, it be hard for those potential employees to get to work. Improving transit can help.

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