The Climate Adaptation Challenge

In the last several years, the term climate adaptation has been increasingly used within government, industry, and ENGO circles as the need to invest in infrastructure resiliency become more urgent. Fortunately, as a result of our infrastructural and industrial interdependencies, climate mitigation/adaptation is a team sport, one in which Canada’s industries are teammates. With the alarm bells on climate adaptation having been heard, discussions now revolve around the best strategies and path ahead for hardening infrastructure and building better moving forward. A proposed National Adaptation Strategy, interest in retrofitting current facilities to make them more efficient, increased scrutiny of companies’ climate disclosures, and many other concepts and ideas are currently on the table. While increasing the focus on adaptation and resiliency is an important step, what ultimately stands in the way of taking actionable steps is cost. And utility companies are no exception to the predicament of cost when it comes to climate adaptation.

While Canadian electricity companies have made substantive progress towards preparing climate adaptation plans, each company is facing a challenge on how to fund the large-scale adaptation projects ahead, while also continuing to decarbonize the grid, while also increasing the supply of electricity to meet future demand, while also complying with layers of regulations. Suffice it to say, the electricity sector is at the crux of many changes and is carrying a heavy burden – one which encompasses the decarbonization goals of every other sector as we move towards electrifying the economy. As it relates to climate adaptation, the cost is currently one of the greatest impediments to hardening the grid which this teammate is facing. Utility companies will require further monetary investment from the government, and improved awareness and more standardized procedures for inclusion of climate change adaptation into rate applications. This will be necessary if we are to continue delivering clean, reliable, affordable electricity to Canadians in the years/ extreme weather events to come.

Electricity markets and regulations in Canada vary from province to province. Some provincial regulators have embraced being part of a team and are working with utilities to invest for the future through rate applications. This teamwork will ensure electricity infrastructure is more resilient, and help utilities find solutions that make electricity more reliable and affordable. But more work must be done to ensure that regulators have a solid understanding of the value of climate adaptation, and necessary investments are made to enable electricity markets to improve resiliency so that all Canadians can continue to rely on their electricity system.

It is also important to understand that the impact to utilities during extreme weather events is not contained to just the operations of the utility, but rather impact larger systems and the broader society. For example, during even short power outages, grocery stores are at risk of food products spoiling, and the store being temporarily out of service, during which time customers are not able to purchase what they need. When it comes to electricity, every business and entity must willingly play as part of the team for the greater good of Canadians. In order to be an effective teammate, players must understand that while there is a cost to increasing resiliency, there is a much greater cost awaiting should we fail to invest in hardening our infrastructure today.

Canadian utilities are champions of delivering affordable, reliable, and clean electricity. Today, Canadians are so used to having over 99% reliable electricity that even momentary interruptions are considered significant! While utilities are proud of their track record, climate change is making it increasingly difficult to continue to balance between clean, reliable, and affordable power. In the years ahead, cost will increasingly become a factor. With the electricity sector moving towards Net Zero emissions by the year 2035, electrification of other sectors including transportation, and more frequent and severe weather events requiring investments to harden the grid and fix damaged infrastructure, it is evident that utilities have an expensive responsibility ahead.

Taking a step back, in order to meet Canada’s climate goals, what is currently needed is teamwork, and the most important skill of this team must be understanding. Understanding from all players, including industry, regulators, government, business entities, and Canadians, that utilities understand the climate crisis we are in and are striving to serve as the catalyst for decarbonizing the economy. Understanding that this teammate simply needs to be enabled to do all the things it is being asked to do, and all the things it wants to do to electrify the economy. Understanding that with this responsibility, comes a cost. With this understanding, we can facilitate the funds needed to ensure a safe and clean climate for Canadians for generations to come.