Shaping the Energy Transition

Dr. Tarun Khanna on Policy, Economics, and the Path to Net Zero

Interviewed by: Amber Lee

Organized/Written by: Amber Lee

Dr. Tarun M. Khanna, Assistant Professor from UBC

As the world accelerates its transition to cleaner energy, the policies guiding this shift are just as critical as the technologies driving it. Behind every breakthrough in renewable energy, decarbonization, and sustainable infrastructure lies a framework of regulations and strategies shaping the path forward—work that defines the future of our energy usage.

Navigating the complexities of energy and climate policy is Dr. Tarun Khanna, a distinguished professor and policy practitioner with international experience in energy economics and public policy frameworks, with a focus on the economics of the decarbonization of the energy sector. 

We met with Dr. Khanna to discuss his perspective on the current state of policy surrounding the energy transition, in Canada and around the world.

Firstly, the amount of research on clean energy and sustainability right now, it's frankly a little overwhelming and I find that policymakers are often struggling to keep up with this influx of technology and new information. Do you have any ideas or any concepts on how we could accelerate the pace or impact in creating these policies? 

Yeah, you're absolutely right. The amount of research in general, but research specifically in the energy transition or policies for energy transition, is increasing at an exponential rate. So if you look at a graph of how much the research is increasing, it kind of looks like the rate at which COVID was increasing at some point. It's that really steep curve. 

That does create a big challenge on how to convey this to policymakers. It's also challenging that a lot of times, individual studies don't agree with each other. That's the nature of science. Whenever you do trials or experiments, there will be some sort of statistical variation. Studies can therefore give you completely opposite results. And if people approach policymakers with these individual studies, then it can rapidly get very confusing for anyone who's from a non-technical background. 

So what we have been working on—and this is an approach that I've been working on with some people in other parts of the discipline—is about evidence synthesis. And this is something which is common in health sciences. With the COVID example, the success of a vaccine is not decided by one individual trial, but rather hundreds of trials. Then you will collect data from all these trials or whether they were successful or not, and you will synthesize it. Then, there will be a consensus about whether this works or not. Because there’s so much research out there, I believe this approach of evidence synthesis can actually help us in this current climate policy framework as well.

It sounds like evidence synthesis requires a ton of different people working on it just to get all this information together, so with something that's more technical like energy, how do you communicate between different fields and simplify that language for those who may not have that expertise? 

Once you get some sort of technical evidence, you must communicate it, right? That's actually not that significant of a challenge. The nuance of it sometimes gets lost, and I think that's the biggest problem with policy. As policy advisors, scientists want to be very nuanced in their policy advice and that's something that policymakers don't necessarily want to hear. 

They want to know whether it works or not and not whether it works only if you do A-B-C-D. And that's a challenge for almost any discipline which has policy applications. That's not unique to climate or energy. 

I was wondering in your experience as a policy practitioner, what are some common setbacks in implementing these strategies and solutions geared towards the energy transition?

First is the rough part dependency. We are coming from systems that have worked a certain way for a better part of 100 years now, so the challenge of changing minds—not the scientists, but of people who are actually working in big organizations. They're used to doing things a certain way, they have a certain way of thinking—changing that is always the biggest challenge. 

Regulatory frameworks are really hard. Regulators are very—and rightly so—risk-averse by nature. Many times, their task is to ensure that consumers get energy at reasonable prices. Thus sometimes, they're averse to experimenting with anything that can possibly disrupt the balance. It also depends on the jurisdiction, because in certain jurisdictions the regulators will have absolutely no incentive to experiment with energy transition. That's the second big challenge that we have seen. 

I also work a lot in developing countries, so this is more relevant there than in Canada, but the importance of coal is the third. The energy transition requires us to transition out of coal, but that transition can be difficult simply because it genuinely has a lot of economic benefits. Coal is one of those interesting industries that leads to a lot of negative health outcomes for people in the area, but it also creates a lot of positive benefits for those communities, whether that be in the form of jobs, income generated, or assets created. It's a real problem when you want to move or close down these coal communities. 

So that's a real challenge: how to convince people to shut down things that are actually quite economically profitable for them. In Canada, I think there is a similar sort of problem with policy practitioners in terms of the resource question. When we have resources that we can exploit in the next 50 years, should we not be exploiting them? Essentially, should we not be exploiting natural gas? Those are big policy questions that do limit the energy transition.

What do you think about that idea of tiptoeing the fine line between sustainability and economic viability? Do you believe society is geared towards one side or the other in this recent climate?

Well, I think the balance shifts for sure. In several countries, we are seeing the balance shift a little towards the economic concerns becoming more prominent. Whenever that happens, the emphasis on the energy transition then goes down. On the other hand, it's also equally true that in large parts of the world, if you have the right policy framework in place, then that trade off is not so high. Renewable energy is genuinely the cheapest mode of generating energy in large parts of the world, and that significantly reduces the trade off. 

A lot of the time, what the government needs to do is simply stay out of the way of renewables. We've seen this in the United States, where certain states have deployed large amounts of renewables without real government support as long as the government was willing to step aside. There's a very interesting case study of Vietnam, which basically had little to no deployment of solar energy until 2018. Then, following a regulatory change which allowed solar plants to get developed relatively easily, we saw an exponential increase in solar energy. So the trade off exists, but there can be ways of minimizing that trade off as well. 

Looking 5 to 10 years ahead, what area in the energy transition do you believe holds the most potential for growth and financial growth? 

I think we will see a continuous push towards decarbonization of the power system. That's unlikely to be reversed even in places like the US, but definitely should accelerate more in other parts of the world. As an example, the UK has come up with a plan to decarbonize its electricity system completely by 2030. Those are ambitious targets, but they seem to be serious. I think we will see genuine growth in the deployment of renewables. 

On the topic of energy goals set by the government, Canada has a few pretty ambitious ones: like reaching net zero carbon emissions by 2050. How achievable do you believe that is? 

Specifically for Canada, it's been made tougher by the circumstances we find ourselves in right now. I think sometimes there is a big investment push required for achieving net zero. And appetite for that investment does reduce if you're in a very challenging economic environment. That's where we find ourselves in Canada. Depending on how the politics of the country evolve, we might see a slowdown. That's what I perceive from the trends that we are seeing right now. 

It need not be this way though. Again the example is the UK, which is also seeing a very challenging economic situation. However, the Labour government there has identified the energy transition as a way to increase investment and boost the economy. So, my short answer would be that 2050 is a bit far in Canada and I think we’d need multiple policy changes. At this point I'm not super optimistic, but I think we have the tools. Rather, we need to find the will to actually go for it. 

Does public perception have a big impact on pushing for energy goals, and if so, how do you shift the public view on the energy transition? 

Absolutely. I think the public perception definitely has a massive impact. Within Canada, there are two very different distinct aspects. Canada has some of the highest per capita emissions in the world, not necessarily because we consume more carbon-emissions intensive energy, though that's definitely one part of the equation. The other part of the equation is that we are also producers and exporters of energy. 

Public perception is important in both situations. If the energy transition leads to an increase in prices of energy for people, or there's a perception that it will lead to an increase, that obviously causes politicians to push against it. But the other aspect of it is simply the emissions from the production of oil and gas, and that's also very significant for Canada. It also involves the general public deciding whether we should continue to support production of these commodities or not. That just means foregoing revenue and wealth.