Environment Minister Steven Guilbeault has released draft regulations designed to clean Canada’s electricity grid, billing the move as key to Canada’s economic competitiveness, transitioning the energy economy and combatting climate change.
But, the plan is drawing opposition from more fossil fuel heavy areas of the country, including the ire of the Alberta and Saskatchewan governments.
Federal officials say the regulations would drive up the cost of energy slightly, but they add that would be offset by the savings expected to come from moving away from fossil fuels.
Environment and Climate Change Canada estimates the national average household energy bill will increase by $35 to $61 per year if the regulations are adopted, but by 2040, only two per cent of that increase will come as a result of the regulations.
“So we would be paying more for electricity with this regulation and without,” said Brett Dolter, with the University of Regina economics department.
Dolter was one of the economists who assisted on the modelling for these regulations. He said that while it will cost a significant sum to reach net-zero it needs to be looked at with a cost-benefit analysis.
“It was a smoky, hot summer in Saskatchewan. So my SaskPower electricity bill doubled because I was using more conditioning to keep cool and using air purifiers to try to keep my air clean for my two kids. So those are the types of costs we’re trying to avoid by dealing with climate change.”
The government plans to cover up to half of the cost of the regulations through tax credits, low-cost financing and other funds, which could mean even less cost is passed onto consumers, Guilbeault said at a press conference in Toronto.
The government has set a target of making the electricity grid net-zero by 2035, and the regulations are meant to help guide the way.
The minister also said he expects increases to be offset as people move away from fossil fuels to heat their homes, cook food or power vehicles.
Overall, Canadians are expected to spend 12 per cent less on energy by 2050, government estimates show.
“Shifting to clean electricity saves households on their energy bills, away from the shocks of yo-yoing gas and oil prices,” Guilbeault said.
There is some flexibility for the use of fossil fuels like natural gas and diesel being built into the regulations.
Many northern communities that aren’t connected to broader power grids rely on diesel generators. Natural gas is also set to be used for baseload generation in emergency or peak usage periods, with provisions around carbon capture technology being included.
“What we fundamentally have to do is move natural gas from being a first choice to an absolute last resort. We really can’t be building out a lot of new natural gas,” Evan Pivnick from Clean Energy Canada said.
“But the idea that there’s a role for some of what exists now as we move through this transition, I think that should be expected.”
Electricity infrastructure expenses are expected to increase significantly over the next several decades as maintenance and increased demand is estimated to cost $400 billion by 2050.
The country’s grid is already nearly 85 per cent clean, but demand is expected to double by 2050 as things like cars, buses and trains become electric.
“Why not make sure that this build-out is clean and affordable?” the minister posited.
The government expects the draft regulations would decrease greenhouse gas emissions by 342 million tonnes between 2024 and 2050.
Guilbeault and environmental groups at the announcement say this plan will help ensure Canada’s economic competitiveness as the green economy emerges. The environment minister pointed to Volkswagen’s planned battery plant in St. Thomas, Ontario as an example.
“Canada’s economic competitiveness is demanding clean power. Companies are clamoring for clean power, making it a condition of their investment. So maintaining a prosperous and competitive economy, it’s going to require that we move in this direction,” said Jason Dion of the Canadian Climate Institute, after the announcement.
These regulations now enter a 75 day public comment period, which officials say will help shape the final regulations that are expected next year.
Prairie Opposition
The announcement is not sitting well with Moe, who said this announcement is not taking provincial jurisdiction over power generation into account.
“We will always put Saskatchewan first, and our province’s path to a net-zero grid will be no different.”
The province’s Crown electricity utility, SaskPower, is committed to a net-zero target by 2050.
Alberta Environment and Protected Areas Minister Rebecca Schulz echoed Moe’s sentiments, saying that province’s input is not reflected in these regulations.
“The draft regulations are unconstitutional, irresponsible, unrealistic and would make life less affordable for Albertans and Canadians,” Schulz said during a news conference.
“They will not be implemented in our province, period. They can’t. We are beginning our talks with the federal government, and if we can’t get alignment we will chart our own path to ensure we have reliable and affordable electricity for the people we serve.”
Schulz added she has been on the phone with power producers since the announcement was made and many are concerned about the future of natural gas electricity, despite exemptions. Schulz says this is reliable baseload power that is necessary to get through Alberta winters.
Like Saskatchewan, Schulz said Alberta is working toward a carbon neutral power grid by 2050.
In a statement, Premier Danielle Smith said the federal government’s draft rules don’t align with Alberta’s emissions reduction and energy development plan.
“These regulations make desperately needed investments in new natural gas generation almost impossible. If implemented in Alberta, these regulations would endanger the reliability of Alberta’s power grid and cause massive increases in Albertans’ power bills.
“Alberta’s government will protect Albertans from these unconstitutional federal net-zero regulations.”
Smith said Alberta is about to start a working group with the federal government.
“If this alignment is not achieved, Alberta will chart its own path to ensuring we have additional reliable and affordable electricity brought onto our power grid that is available 24 hours a day, 365 days a year.
“This will be accomplished by ensuring an appropriate amount of high-efficiency natural gas base load is added to the grid while incentivizing carbon capture, utilization and storage (CCUS) abated natural gas generation, small modular reactors, hydrogen generation and a sustainable amount of wind, solar and other renewables to drive down electricity costs.”
With files from The Canadian Press and Emily Mertz, Global News