Federal government releases new draft regulations on clean electricity

Environment Minister Steven Guilbeault released draft regulations Thursday that are designed to clean Canada’s electricity grid in an affordable way by 2035.

The regulations would drive up the cost of energy slightly, but federal officials say that would be offset by the savings expected to come from moving away from fossil fuels.

The government has set a target of making the electricity grid net-zero by 2035, and the regulationsare meant to help guide the way.

The Environment and Climate Change Department estimates the average household energy bill will increase by $35 to $61 per year by 2040 if the regulations are adopted, but only two per cent of that increase will come as a result of the regulations.

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 on to consumers, Guilbeault said at a press conference in Toronto.

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-yo-ing gas and oil prices,” Guilbeault said.

Conservatives are highly critical of the 2035 target and the potential cost it represents to consumers.

“This government has already increased the carbon tax and poured billions of dollars of fuel on the inflationary fire; now, they are going to ratchet up the cost of the electricity that is a necessity for families and businesses across Canada to literally keep the lights on,” Conservative environment critic Gérard Deltell said in a written statement Thursday.

Electricity infrastructure expenses are expected to increase significantly over the next several decades. It’s estimated infrastructure maintenance and increased demand will 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, and homes and buildings switch away from fossil-fuel heating sources.

“Why not make sure that this build-out is clean and affordable?” Guilbeault posited.

The government expects the draft regulations would decrease greenhouse-gas emissions by 342 million tonnes between 2024 and 2050.

Provincial governments in Alberta and Saskatchewan say they can’t meet the 2035 goal, preferring to set the target for 2050.

Alberta Premier Danielle Smith called the draft regulations unconstitutional and irresponsible.

“They will not be implemented in our province – period,” Smith vowed in a statement Thursday.

Alberta Environment Minister Rebecca Schulz said the rules set the stage for an astronomically expensive and ultimately unreliable power supply.

In an interview Thursday afternoon, Guilbeault said he believes the department struck a “good balance” after consulting with provinces, territories, private and public utilities, investors, sector experts and Indigenous groups.

The federal government has been seeking feedback on the regulatory framework for nearly a year and will consult on the draft regulations for 75 days, with a final version expected to be published in January 2025.

They won’t come into effect until 2035, but given the long lead time needed to build new electricity infrastructure, Guilbeault said the government wants to give the industry plenty of notice.

“One thing we’ve heard from investors, from energy companies, is: ‘Tell us what the rules are, and we will comply with them,'” he said of the consultations so far.

Guilbeault said the draft regulations are designed to be affordable and achievable with technology that is already being used across the country.

“Clean electricity is already the most cost-effective in Canada, even after accounting for its variability,” said Jason Dion, senior research director with the Canadian Climate Institute.

“There are many ways to ensure the grid remains reliable as the share of wind and solar electricity grows, including flexible electricity demand, battery storage and greater provincial interconnection.”

The regulations are also intended to show some flexibility, the minister said, and would allow electricity that doesn’t meet the new net-zero standard to support the power grid during periods of peak demand.

Electricity Canada has asked for more information about how that will work, among other clarifications.

Schulz dismissed the proposal to allow gas-powered plants to backstop peak energy demand.

“Alberta’s natural gas power plants cannot simply be kept in the cupboard and brought out to turn on and off whenever they’re needed,” Schulz told reporters in Calgary.

She also rejected a proposed regulation to allow power plants operating in 2025 to be exempt from greenhouse gas emissions caps for 20 years, in effect allowing some to go past the 2035 deadline.

“Who’s going to build that plant with a lifespan of 20 years?” she asked.

“It’s a bait-and-switch. It’s not going to work for Albertans or quite frankly, a number of other provinces across the country.”

Guilbeault said the regulations are still a draft, and the consultations will continue.

“If there are things that aren’t clear, if there are some clarifications that are needed, we will certainly provide that in the coming months,” he said.

The regulations also exempt remote communities that aren’t part of the power grid.

Federal and provincial governments are working together on plans and projects to reduce and eliminate the dependence on fossil fuels in remote communities, the minister said.

“We understand we’re not there yet, which is why we’ve decided to ensure that the regulations wouldn’t apply to them,” he said.

He would not say if they have a timeline in mind to make clean electricity more accessible to those areas.

This report by The Canadian Press was first published Aug. 10, 2023.

— With files from Dean Bennett in Edmonton.

Laura Osman, The Canadian Press