Ottawa releases Clean Electricity Regulations

The federal government has released a draft of its net-zero electricity plan that will drastically reduce fossil fuel use, though allow some natural gas power generation. Environment Minister Steven Guilbeault unveiled the Clean Electricity Regulations (CER) on Thursday with the goal to make Canada’s electricity grid carbon neutral by 2035.

Minister Guilbeault stresses that the aim is to arrive at a net-zero grid by 2035, thought not a fossil fuel-free one. He expects some fossil fuels to remain, but they will have to comply with strict environmental and emission standards. Natural gas plants will be allowed to emit no more than 30 tonnes of carbon dioxide per gigawatt hour annually. Ottawa believes these facilities can maintain this limit with the aid of current carbon capture technology and storage systems, which would sequester 95 per cent of emissions. In contrast, non-emitting sources of electricity (hydro, wind, solar and nuclear) should not have problems complying with the CER.

Exceptions will be made during emergencies and peak periods when renewables cannot meet demand.  Further, some newer plants may not have to comply with the rules until the 2040s, because the CER applies to plants operating 20 years after they are commissioned. This grace period does not extend to plants that open after the regulations are finalized in 2025. Communities that lie in remote and northern areas that are not connected to the main power grid won’t need to suddenly transition from diesel to solar or wind.

Ottawa calculates that more than $400 billion is required to replace aging facilities, expand generation capacity and to meet demand from electric heating and cooling systems, electric vehicles as well as population and economic growth. The 2023 federal budget is already committing more than $40 billion over the coming decade to support Canada’s clean electricity sector through tax measures, public financing and grant contributions. Some of these funds will be tied to the provinces and territories, as long as they commit to the 2035 goal.

Currently, more than 80 per cent of Canada’s power grid is non-emitting, sourced from hydroelectric, nuclear, wind and solar generation. In contrast, power generated from biomass, petroleum and coal (which is being phased out) account for less than eight per cent (or 52 megatonnes of carbon dioxide).

Environment Canada believes the CER will reduce emissions from 2024-2050 by 342 megatonnes of carbon dioxide. The regulations are similar to plans issued by other G7 countries, including the U.S. Meanwhile, the Canadian Climate Institute forecasts that Canada needs to double or triple its electricity generation by 2050.

Reaction from the West

The public, including Provinces and Territories, will have a 75-day window to comment on the draft regulations. However, ahead of the Thursday announcement, Alberta’s Environment Minister Rebecca Schulz refused to implement the CER in her province, calling the regulations unrealistic. She added that Ottawa is threatening provinces by withholding federal funding from electricity projects that don’t reduce greenhouse gas emissions.

Saskatchewan is also resisting the CER, fearing that homes, infrastructure and businesses will suffer to suit Ottawa. Instead, the province has set its own net-zero power generation goal of 2050, 15 years after the CER target.

Meanwhile, Nunavut notes that solar and wind power, while beneficial, cannot sustain the territory’s extreme environment. Instead, Nunavut plans to eventually to wean itself off diesel through projects such as the Kivalliq Hydro-Fibre link, which would connect central Nunavut to Manitoba. The territory requests that Ottawa back this project.

To learn more about the potential implications for your organization, please contact a member of our environmental or energy practice groups.