The national lobby group for Canada’s electrical utilities is taking criticism for its latest broadside against federal clean electricity regulations that are seen as a cornerstone of the plan to reduce the country’s climate pollution.
Electricity Canada CEO Francis Bradley says his members don’t oppose regulation—in fact, they’re proud to tout the 55% reduction in electricity emissions they’ve achieved since 2005. They’re just looking for a set of rules that is flexible enough to reflect what they say is achievable in different provinces.
“This isn’t opposition to clean electricity regulations,” Bradley told The Energy Mix. “This is opposition to clean electricity regulations that actually won’t work in every jurisdiction, and we want them to work.”
“They’re an industry association, so they’re representing the interest of their members, and in this case the interests of a few of their members who have a lot of natural gas or other fossil fuels on their electricity system,” responded Stephen Thomas, clean energy manager at the David Suzuki Foundation.
“One of the biggest barriers to Canada achieving its clean electricity target is that in large part we are not trying to meet it,” Thomas added. “That’s why it’s so important to have the final Clean Electricity Regulations (CERs) in force this year so that we send a very clear policy signal to system operators and utilities to finally come to the table… so that each individual province, each individual utility, can reach those important goals.”
Flexibility and More Flexibility
When Environment and Climate Change Minister Steven Guilbeault published the first draft of the CERs in the Canada Gazette in August, 2023, his department made it clear from the start that provincial utilities and private power producers would be allowed to run natural gas power plants under the new rules—but only if they could capture 95% of the carbon pollution they produce. Officials speaking on background said their “technology-neutral” approach would allow utilities to choose the electricity sources they relied on, but they would not be permitted to emit more than 30 tonnes of carbon dioxide for every gigawatt-hour (GWh) of power they generate.
“This inclusive approach is important,” the officials told media at the time, because “affordable, reliable power is going to be the foundation of the net-zero economy.”
The regulations in their original form were expected to cut Canada’s greenhouse gas emissions by a cumulative 342 million tonnes from 2024 to 2050 and reduce household energy costs by 10%, according to one economic analysis, or 12%, according to the Canadian Climate Institute. Canadians would pay more for electricity and use more of it, a federal official said. But those costs would be “more than offset by the fact that we’re no longer going to be buying gasoline or diesel to power our cars and trucks, we’ll no longer be paying for natural gas to heat our homes and cook our food, and we’ll no longer be using natural gas for things like cement and steel and aluminium,” all costs that are passed on to households in the price of consumer goods.
While the regulations are at the centre of the federal government’s plan to tackle climate change and “become an engine of the net-zero, prosperous economy,” Guilbeault said at the time, the “core of this vision” was to keep electricity rates affordable across the country.
“Without these regulations, provincial utilities will still need to invest at least C$400 billion by 2050 for ongoing maintenance, and to build out the electricity grid to meet growing demand,” he explained. So “the obvious question is, why not make sure that buildout is clean and affordable?” If provinces and utilities took full advantage of the funds Ottawa was offering to cover the additional cost of that transition, “the federal government will offset more than half the cost of cleaning the grid and reducing costs to ratepayers.”
A scant six months later, on a Friday afternoon before a long weekend, the government released an 11-page update [pdf] that offered more flexibility for power producers to burn natural gas and embrace carbon capture and storage (CCS) technology, but contained no specifics on how the revisions would affect greenhouse gas emissions. Guilbeault maintained Ottawa’s commitment to a net-zero grid remained unchanged.
“This is a totally normal process,” he told the Globe and Mail. “We put out draft regulations. We consult. We listen to what people have to say. And then we adjust. We do that all the time.”
Tougher to Decarbonize
Negotiations continued from that point. Then in late August, Electricity Canada released a digital ad campaign on social media, accusing the government of ignoring the industry’s expert advice and pushing ahead with regulations that “will make it even more difficult to fully decarbonize the electricity grid.”
The association said the latest draft of the regulation “relies on technologies that have either not been deployed anywhere in North America, or do not exist at all,” adding that “until technology catches up, electricity providers will need some natural gas to operate their systems safely and affordably. Doing away with it will make the system unreliable.”
Globe and Mail columnist Adam Radwanski commented that the PR campaign “reflects a sharp shift in tone by the industry group, previously much more measured in its criticism.” After an early August meeting with departmental officials, Radwanski reported, Bradley said he was “dismayed by the extent to which the regulations had been modified, and by indications that the government did not want to tweak them much further before finalization”—particularly not the 30-tonne limit on emissions.
Guilbeault’s communications director dismissed the claim that Ottawa hasn’t listened to industry concerns, pointing again to more than $40 billion the government had offered up to ease the transition. “The level of consultation we have undertaken in the design of these regulations has been unprecedented,” Oliver Anderson told Radwanski. “We all want to get the regulations right, so that they support provinces to deliver reliable, affordable and clean electricity future for Canadians.”
Bradley said his members are holding out for a solution that works in a province like Saskatchewan, in the middle of a grid emergency brought on by extreme weather. “This can’t simply be a solution that works for energy modellers working their spreadsheets in Ottawa,” he told The Mix. “This absolutely has to work for the people who actually run the electricity system.”
Utilities are committed to renewable energy as “a huge part of our future,” Bradley added, but “one of my fundamental questions in all of this is where the stability of the grid going to come from.” Solar and wind have a place on the grid today because “we’ve got spinning turbines providing the reliability,” he said, and “that’s not going to disappear.”
Solutions on the Horizon
But with other countries decarbonizing their grids at record speed, Electricity Canada’s pushback on the CERs is raising concern that Canada could lose the competitive advantage of an electricity system that is already more than 80% non-emitting. To sustain that lead, “Canada must ramp up clean electricity at the speed and scale others are already achieving to lower energy bills, have healthier air, and attract tens of billions in investment,” the Suzuki Foundation’s Thomas and Aliénor Rougeot, climate and energy program manager at Environmental Defence Canada, wrote in an August 7 op ed for The Hill Times.
But Ottawa’s plan to move in that direction “has been met with vocal opposition from some provinces and industry incumbents, making it hard to decipher facts from fear-mongering when it comes to what Canada’s clean energy future can look like.”
In response to the calls for more flexibility, Ottawa is considering “more than 10” possible revisions to the draft regulations, Thomas and Rougeot said. “One of the proposed changes is to set an emissions limit on an electricity-producing facility as a whole, instead of on each unit of electricity it produces. That change alone would be sufficient to address most of the concerns expressed by producers.”
But “other options under consideration include exempting existing gas plants from the regulations for up to 30 years or weakening the standard imposed by the regulation by increasing the limit of emissions allowed. These are unacceptable and could undermine the effectiveness of the policy. For example, if fossil fuel companies get what they’re asking for, Ontario could still be reliant on fossil gas electricity as far out as 2050.”
Evan Wiseman, senior manager, climate policy at The Atmospheric Fund, stressed that the competitiveness concerns extend across the Canadian economy—to municipalities, industrial end users, and potential new investors that are all looking for clean power.
In March, Wiseman warned that cities won’t be able to meet their own climate targets if the Clean Electricity Regulations are watered down. Now, he says communities across the Greater Toronto and Hamilton Area are saying no to new gas plants, and not a single municipally-owned gas utility has expressed any opposition to the CERs.
“I’m not shocked that fossil fuel companies would like to emit more fossil fuels,” he said in an interview last week. But a new gas plant commissioned in Ontario today will be on the grid for 20 to 30 years, “and in general, municipalities have been very clear that they don’t want that. Even municipalities hosting natural gas plants now say they don’t want to host them anymore,” since gas-fired generation is already more expensive than solar or wind with energy storage.
“Nobody wants a natural gas plant in their back yard,” he said.
Wiseman added that the concern extends to heavy industry and manufacturing, including international investors deciding where to locate new production facilities.
“We have to listen to what industry is saying, and not just the energy industry,” he said. Tech companies, automakers, advanced manufacturing businesses, and others “all have ESG requirements from their shareholders to be responsible, lower-emitting global citizens. So this is not just environmentalists getting upset. This is about jobs in Ontario and having a grid that can be competitive” at a time when the U.S. grid is investing massively in decarbonization.
The electricity sector itself can also benefit from the clear rules Ottawa is trying to lay down through the CERs, Wiseman said. Electricity Canada has said it wants the cost savings utilities can achieve through rooftop solar, for example, but “that’s a new system. And that requires investment, not necessarily just in money, but in time and planning. And that’s where we need to be going globally as this new technology is available to us.”
Picking a Pathway
Thomas cited modelling from multiple sources showing how Canada can meet a 2035 grid decarbonization target. The main technology options in that modelling underscore “a big part of the discrepancy between the future we see and why Electricity Canada tells us it’s impossible,” he said.
“We see so much opportunity in moving forward with wind, solar, energy storage, energy efficiency, and grid upgrades and transmission,” he told The Mix. “That’s what was featured in our research, and it’s the technology set that Canada knows how to build. We know how to build renewable energy projects. We’ve done it for more than a decade in every province. We know how to build transmission lines in Canada. We know how to build energy storage.”
When Electricity Canada and its members “talk about impossible technology pathways, I believe they’re talking specifically about things like small modular nuclear reactors and carbon capture and storage, and on that note, I agree with them—those technologies are too expensive, and very, very unlikely to be ready in 2035, 2040, or even later.”
But with more practical, affordable, renewable options available now, “we have everything we need to get on with this really important work right now.”
Getting From Here to There
With the 2035 CER deadline just a decade away, Bradley pointed to the long time it takes to get new grid projects approved and warned that supply chains for energy equipment are already getting more precarious as global demand skyrockets. “If you’re an electricity service provider and you’re trying to get some of these larger, complex, transmission-level transformers, for example, we no longer measure the wait in months. We now measure in years,” he said. “To be able to deliver on a promise 10 years out in a world where our supply chains are stretching is difficult to say the least.”
Thomas agreed that the industry faces “an enormous challenge, and one we can’t ask utilities to handle all on their own, on the rate base they get from charging customers for electricity.” He said it’ll be up to the federal government, and to some extent for the provinces, to fund and support the new interconnections and other infrastructure that utilities will need.
“We think there is a really important role the federal government to play, not only in sending this clear policy signal [via the CERs], but in convening provinces, utilities, system operators, and stakeholders in the sector and providing them the resources they need to build a multi-year plan for how they’ll decarbonize the electricity system.”
Thomas acknowledged that Alberta, Saskatchewan, Nova Scotia, New Brunswick, and to some extent Ontario “have more work to do than the provinces that already have a lot of clean electricity,” and called on Ottawa to “put a little more funding on the table” for those jurisdictions.
But none of that means weakening or delaying the Clean Electricity Regulations. He said industry lobby groups came out with similar rhetoric in 2017 and 2018, when the federal government’s coal phaseout regulations were under development.
“Many industry voices were saying it was completely impossible, it would be far too expensive, there would be blackouts, and the sky would fall, and of course that’s not what we’ve seen,” he said. “Now that those regulations have been in place for a time, they’ve all done fantastic work to phase out coal even earlier than the regulations required.”
Bradley, too, praised Alberta utilities for getting the phaseout done a decade ahead of schedule.
