Efficiency Recognized as Priority Energy Resource in Energy Transition Québec’s First Master Plan

June 12, 2018 Brendan Haley Efficiency Canada Policy Director   Yesterday, Transitions énergétique Québec (TEQ) released its first “Master Plan” on “energy transition, innovation, and efficiency”. TEQ is a Québec state corporation created in early 2017. It is funded by cap and trade revenues, a charge on energy distributors, and another “energy transition” fund. The full 229 page document is a full-spectrum “energy transition” plan. It includes more than $6 billion in investments and 225 measures over five years, with 15 roadmaps to meet objectives in areas such as land-use planning, personal and freight transportation, off-grid power systems, financing, education, and research and development. The plan involves TEQ’s own programs, as well as those coordinated with government ministries, and the province’s electricity and natural gas distributors (Hydro-Québec, Énergir and Gazifère). The plan demonstrates that a high level of integration is needed to achieve energy transition. For instance, the document notes how incentive programs smooth the way for stronger regulations. TEQ innovation priorities include learning about new technologies and practices that shape energy demand, such as autonomous vehicles and new building designs. There is also a financing section, with plans to work with financial institutions and labour-sponsored funds to increase sustainable energy investments. This plan was developed after an extensive public consultation, followed by government review. There is also a stakeholder panel created by legislation that produced its own independent report. TEQ states that all programs will be independently evaluated, yet it is not yet clear how. Also, the review process is not over, because the energy regulator will now take a look (see below).  

Energy Efficiency Recognized As Priority Energy Resource

The top guideline in the plan recognizes “energy efficiency as a priority energy source”. This is an important acknowledgment of energy efficiency’s role that could create important changes to energy system planning and operation. The plan also aims to significantly reduce the province’s dependence on petroleum products. Some energy efficiency related highlights include:

Buildings (Residential)

• Adopt the 2015 National Energy Code for Buildings (with modifications), and publish a voluntary building code beyond minimum regulations for new buildings and renovations.
• Expand efficiency regulations for appliances to include new components such as doors and windows, and update regulations frequently.
• Introduce a building labeling system through a working group and pilot project, moving towards a mandatory system by 2023-28.
• Prohibit the installation of heating oil systems in grid-connected houses. Legislation introduced in 2021-22 with the ban in force by 2023-28.
• Offer voluntary certification for building entrepreneurs (rénovation écoénergétique).

Buildings (Commercial and Institutional)

• Introduce a voluntary program to publish building energy data, made mandatory by the 2023-28 timeframe.
• Publish a voluntary building code beyond minimum regulations for new buildings and renovations, with a vision towards new buildings being net zero energy by the 2028-2033 time frame.
• Create a waste heat recovery registry, with declaration of waste heat becoming mandatory by 2023-28.
• Promote green leases.

Industry

• Promote ISO 50001 Energy Management System with a goal towards making it mandatory for large energy consumers that receive financial aid by 2023-2028.
• Consider integrating an energy efficiency clause within large industry environmental regulations in 2019-2020.

Transportation

• Promote programs for businesses and institutions to offer sustainable mobility solutions.
• Create a feebate program to encourage the purchase of energy efficient vehicles.
• Support efforts to optimize commercial transport supply chain logistics.
• Create a new “transportez vert” program for companies.

 

Annual Target of 0.6% savings from the Plan’s Initiatives

The plan aims to improve energy efficiency by 1.2% per year, on average between 2018 and 2023. This is an economy-wide target, which includes indirect changes from technological improvements and structural changes as well as the impact of initiatives outside of Québec. TEQ states that the initiatives within the plan are expected to improve efficiency by 0.6% per year (9.9 petajoules), which is higher than the 0.4% or 7.3 petajoules achieved from 2012 to 2017. A big part of the savings and emission reductions will come from transportation. The plan aims to reduce petroleum use by 12% in 2023 compared to 2013 levels. This is more than the government’s directive to reduce consumption by 5% by 2023 as a first step towards a 40% reduction in 2030.  

The Next Step – Regulatory Commission Review

This is not the final stage for the plan. Many of the initiatives led by TEQ and the government can move towards implementation. Yet, the province’s regulatory commission (the Régie de l’énergie) must now review the plan. The regulator approves funds collected from a charge on energy distributors (the “quote-part”) and is responsible for overseeing energy efficiency programs led by energy distributors. Québec’s energy distributors have annual incremental energy savings targets in the range of 0.4-0.5% of sales for electricity and 0.5% for natural gas. Jurisdictions like Massachusetts and Rhode Island are demonstrating that savings could be 2% or greater for electricity and 1.2-1.5% for natural gas. Previous Québec potential studies have estimated that these savings levels are cost-effective. If the energy regulator follows the Master Plan’s emphasis on efficiency as a priority resource, it could move to further increase cost-effective energy efficiency from programs run by energy distributors. Note that Efficiency Canada’s recent report shows that hitting these high savings levels and implementing measures under the Pan-Canadian Framework that are similar to TEQ’s plan could create an extra 57,000 jobs and boost GDP by $9.7 billion per year, on average, in Québec.  

Implementing an Integrated Plan with Efficiency as a Priority Resource

The President and Executive Director of TEQ, Johanne Gélinas, noted at the plan’s launch that the difficult task of implementation lies ahead. TEQ seems to be off to a good start with a detailed plan, and a commitment to be flexible in program administration and to evaluate all initiatives. The TEQ plan demonstrates that energy efficiency is a core component of energy transition. It also shows how numerous efficiency initiatives, from incentive programs to regulations to labeling and data, are all connected and part of moving towards a stronger economy with less carbon, and more energy independence.