We often take energy for granted. Somewhere out there are the producers of energy and somehow it is delivered to our homes and workplaces as electricity, natural gas or some other fossil fuel. A rare few generate their own energy. We use energy continuously to warm and cool our homes, to light our way, to run our fridges, stoves, and washers and to power our vehicles. Moreover, in the first world, we are entirely dependent on electricity to operate the electronic devices on which we depend.
Three weeks ago, in Texas, we were given a glimpse of what happens when the supply of energy to homes fails and what can go wrong when a government fails to guarantee affordable energy to its citizens. Before we gloat too much here in Ontario, let me remind you that our provincial government has mismanaged our energy supply and we have postponed paying the full price of electricity to future generations of consumers and taxpayers.
We need to think hard and plan carefully for our energy needs of the future. I have some optimism that we will find a road that will help find a common ground between environmentalists, industrialists, and regular folks trying to go about their daily lives.
A few decades ago, there were great worries about global warming. In recent years the language has changed to ‘climate change’ because the impact of increased CO2 in our air does not always show up as ‘warming’ as the deep freeze in Texas has shown. Of course, the wildfires in California are the classic image of a warming planet. I have studied climate change for a decade now and at the risk of being called a climate change denier by my buddy Kevin, I just don’t think the answer is as simple as ‘stop driving gas powered cars’. Airplanes and livestock farming are significant contributors to CO2 in our atmosphere and deforestation around the world reduces our capacity to mitigate emissions. Energy production is complicated.
There is a massive cost-benefit analysis to reducing the world’s reliance on fossil fuels and somehow Canada has sought fit to lead the way even though our economy has historically relied heavily on the production of oil. Canadians are being asked by their governments to make a big sacrifice for the greater good of the globe even though we only produce around 2% of the world’s emissions compared to 28% in China and 15% in the US. I am not saying that Canada shouldn’t do anything to try to reduce CO2 emissions, I am just saying that, at the margin, Canada isn’t in a position to save the planet even if we destroy the standard of living for many Canadians.
As I have mentioned many times before, I never seem to get the stock market quite right. As the shares of Tesla rose in 2020, I was sure, just like with GameStop shares, that optimism about the future of the company had far outpaced reality. Nonetheless, Tesla shares kept rising in 2021 and have only recently settled at close to 10x the price that they were a year earlier.
Why are investors so excited about Tesla? As far as I can tell it is a combination of two things. First, the fight against climate change will require all of us to give up our gas-powered vehicles for electric ones. Second, Tesla is a leader in electric car production volume and the Tesla fan club thinks that robust competitors will not displace its proportionate share of the market.
On the first count, I won’t be surprised if gasoline powered cars disappear. After all, Neil Peart predicted this future 40 years ago when I was still in high school. On the second theory I am doubtful. General Motors just announced they will have a fully electric fleet by 2035. My theory is that GM is late to the EV party because they probably knew that going electric is not the low cost solution for consumers or possibly even the environment – but the writing is on the wall, that is what the next generation of consumers wants. Tesla will have competition, and it will be from well-established global firms that know how to build, market, and distribute cars to consumers.
So here is what we know. We are going to move from oil to electricity to fuel our cars. However, if all we do is produce that electricity by burning coal then we haven’t made the environmental leap that we would like to feel good about. In order to win the battle against CO2 we need ‘clean energy’.
Unfortunately, the search for clean energy is not as easy as the media would want you to think. Windmills kill birds, not nearly the number killed by house cats, but enough and in particular some of the more endangered species like Eagles and Hawks – so you are trading one environmental problem for another. Solar panels start at about 20% efficiency and decline over time. There are growing concerns about how we will dispose of solar panels at the end of their useful life. Hydro-electric remains a popular form of clean energy although it does create a significant impact on the local environment where the dam is built.
Powering our Future
As we move away from burning fossil fuels, we will need to generate ever greater amounts of electricity to power our homes and all the cars of the future. I am not sure how far we are from electric airplanes but that must be coming. If this rush to use electricity is the ‘green energy’ future that we want, then we need to start to focus on how this energy will be generated. In my mind the obvious answer is nuclear power.
For full disclosure, my father worked for Atomic Energy of Canada and built nuclear reactors. I learned about the merits of nuclear energy as a kid and some might argue, like the kids that had parents taking them to church every week, that I have been indoctrinated into a religion. I grew up in a home that was heated with electricity which meant no forced air ducts and no air conditioning in the summer. Somewhere among my possessions in a box in the basement is a uranium pellet encased in glass.
If we are honest, nuclear energy scares the heck out of many of us. If you are old enough you will remember Three Mile Island, a little younger and it’s Chernobyl, and the younger yet have Fukushima all to remind us that nuclear energy is a process of harnessing the enormous power created by the nuclear fission of uranium. When the process is not well controlled and well contained, bad things happen.
I am less scared than many only because I was drilled on the merits of the CANDU reactor design and its safety systems. All of these feel good precautions can’t guarantee that nothing ever goes wrong but they sure are reassuring if you take the time to read and understand it all. Some worry about the disposal of used uranium which is a problem that I don’t think is yet solved but is not the type of worry that a reactor meltdown presents.
I haven’t done the homework, but there is a new design for nuclear energy on the horizon. Terrestrial Energy is building a “integral molten salt reactor”. It seems like the big innovation is that it operates at high temperatures and low pressure, which means more of the heat is converted to electricity than a traditional water-cooled reactor. Also, the use of molten salt for fuel and coolant allows for passive safety systems that are designed to be “walk-away” safe.
Engineering is fascinating to me but unlike my dad I didn’t get the degree that qualifies me to understand it all. So, for now I am leaving it to the experts to figure this whole thing out. If they do pull this off our future may well be much safer due to much smaller nuclear power plants that can deliver on our ever-increasing demands for electricity.
By the way, Terrestrial Energy is located near our office in Oakville and our Federal Government has invested to help bring this technology to scale. Go Canada!