Canada’s Draft Clean Electricity Regulations

Introduction

Today, 84% of Canada’s electricity comes from hydroelectricity, solar, wind, and nuclear power. Meanwhile, 30%-84% of electricity in Alberta, Saskatchewan, Nova Scotia, and New Brunswick is powered by coal and natural gas. Canada still aims to achieve a net-zero emissions economy by 2050, and how the provinces and territories, which traditionally hold jurisdiction over electricity, have responded to the goal has recently come under the spotlight with the release of Canada’s Draft Clean Electricity Regulations. This blog will cover what the regulations aim to achieve, the timeline, their reception, and what to expect.

What the Regulations Aim to Achieve

On August 10, the federal government announced their Draft Clean Electricity Regulations, a set of guidelines that aim to help Canada reach a net-zero electricity grid by 2035. The regulations will be implemented under the Canadian Environmental Protection Act, and Ottawa has indicated that their primary goal is to curb investments into the construction of new and unabated gas plants, not immediately shut down existing plants.

Budget 2023 carved out over $40 billion in tax credits, public financing, and grants to reach the net-zero electricity grid goal. To access the billions of dollars in tax credits and grants, there was speculation that the federal government would restrict access only to those provinces and territories that commit to an emissions-free electricity grid by 2035. While the actual regulations have yet to be released, technical briefings and background documents were publicly released Thursday morning.

The draft stresses flexibility and a “technology-neutral approach,” meaning that there will be no preferences, rewards, or punishments for the type of non-emitting power used by provinces and territories to reach the goal. Natural gas plants will instead have to meet a cap of 30 tonnes of carbon dioxide per gigawatt hour or less annually starting in 2035, which can be facilitated by carbon capture and storage systems. In turn, these systems would be required to cut 95% of emissions. Moreover, the regulations carve out that natural gas plants operating by 2025 are exempt from the cap for a 20-year grace period following their commission date, they can operate for up to 450 hours a year, and emission captures would also be exempt during emergencies and peak periods when renewables can’t meet the demand, and remote and northern communities will also be exempt from rapidly switching from diesel to renewable electricity.

Timeline

  • Provinces will have a minimum of 75 days from August 10 to comment on the draft regulations;
  • A final version is expected to become available in January, 2025;
  • The regulations will not come into effect until 2035 in order to give industry notice to adapt and build new energy infrastructure.

Political Reactions

The most vocal opponents of the regulations are Alberta and Saskatchewan, who prefer that 2050 be the new goal for a net-zero electricity grid. In May of this year, Saskatchewan Premier Scott Moe referred to the regulations as “ideological whims of others” and Alberta’s Premier Danielle Smith and Environment Minister Rebecca Schulz have called the regulations “unconstitutional” and “irresponsible.”

Nunavut Premier P.J. Akeeagok has also vocalized his concern and told CBC News that “Obviously, it is a major concern for us not having the different option to provide firm power to our communities” and that “Solar and wind, as great as they are, provide intermittent power that just doesn’t sustain the environment that we are in.”

In an interview with the CTV, former NDP Leader Tom Mulcair commended the regulations but questioned their intention as they were released after 8 years of government. For this reason, Mulcair dubbed them as a “good opening” for the Trudeau government ahead of the upcoming federal election. Mulcair pointed to the political timing of the regulations, which were released a day after Ontario’s Attorney General released their report into the Conservative government’s Greenbelt land swap, which was influenced by developers close to the party. The report could potentially affect Federal Conservative Leader Pierre Poilievre, who similarly stresses cutting gatekeepers in Ontario, while not having a concrete environmental plan.

What to Expect

So far, there hasn’t been much enthusiasm towards the regulations. Provinces that want to keep gas plants running longer are calling the regulations an overstep, while environmental groups are criticizing the lax regulations for appeasing the oil and gas industry. Moreover, the details of the regulations are not yet public or clear, with the industry showing concern over the potential for penalties for energy production used on oil and gas sites.

Last week, Alberta Premier Danielle Smith also announced that the Alberta Utilities Commission (AUC), the province’s approval mechanism for electricity generation projection, would pause on approving new large wind and solar power projects until February 29, 2024, while they hold an inquiry into land use and reclamation. Alberta and other political and private players are not demonstrating an appetite for a net-zero electricity grid, at least not by 2035, so we’ll likely see that the minimum 75-day consultation period be longer than expected.

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