Ottawa floats new options for electricity rules that drew ire of Alberta and Saskatchewan

The federal government is considering significant updates to its proposed regulations aimed at reducing emissions from electricity generation to net-zero.

The move comes after months of consultations with Canadians, the government said, but also follows strong opposition from politicians in Alberta and Saskatchewan.

A draft version of the Clean Electricity Regulations was initially released last August. The regulations function as a set of rules for transitioning Canada’s electricity grid to net-zero starting in 2035.

Environment and Climate Change Minister Steven Guilbeault told CBC News it was always the goal to strike the right balance when it came to the first set of draft regulations.

But Ottawa remained open to comments from provinces and experts, he said, adding the revisions weren’t precipitated solely due to pushback in Alberta and Saskatchewan. 

“I wouldn’t say that the options that we’re proposing in today’s document are the result of the actions or comments of one particular jurisdiction over others,” he said.

“I mean, we’ve held webinars with more than 500 people, we’ve had 75 different bilateral meetings, 18,000 submissions were made. So what we’re putting out today is a result of everything we’ve heard, and not one particular company, individual or even province.”

Last November, Alberta invoked its Sovereignty Act for the first time over the draft regulations. Alberta Premier Danielle Smith called the 2035 target unachievable. Guilbeault has also referenced the 2035 date as a deadline.

Yet, under the prior draft regulations, exceptions would have allowed for significant amounts of emissions from electricity generation into the 2040s, and even into 2050 and beyond.

But even with those provisions, Alberta had concerns. 

Unlike most of the rest of the country, Alberta gets most of its electricity from natural gas. Prominent Alberta economists like Andrew Leach and Blake Shaffer argued Ottawa would need to be flexible in developing the electricity regulations given Alberta’s unique makeup.

WATCH | Alberta invoked Sovereignty Act over net-zero electricity grid regulations: 

In January, Jonathan Wilkinson, the federal minister of natural resources and energy, also told the CBC’s Aaron Wherry that he didn’t feel as though Alberta was questioning the need to green its grid, just the pace of doing so.

“We probably have a view that it can go faster. And so we’ve been trying to actually understand and look at how we might be able to address some of their specific concerns,” Wilkinson said at the time.

“Hopefully, when we get to [finalizing the regulations], Alberta will see that we have reflected seriously on some of the things that they have brought up.”

In November, the Saskatchewan government also said it would use its Saskatchewan First Act for the first time to establish a tribunal to study the economic effects of the proposed regulations.

“We need to get a nuanced, detailed sense of what these policies mean for the economy of Saskatchewan and the people of Saskatchewan,” Justice Minister Bronwyn Eyre told reporters last November.

CBC News has reached out to spokespeople in the Alberta and Saskatchewan governments for comment.

New options under consideration

An Alberta-Ottawa working group has been meeting since last September, with a stated goal of finding consensus around emissions reduction and energy development.

Ottawa said over the past six months, it has been consulting with provincial and territorial governments, the Canada Electricity Advisory Council, Indigenous representatives, electricity providers and environmental organizations, among others.

Based on those consultations, Ottawa said it was considering new options for the clean electricity regulations.

The proposed changes would change several provisions provinces and utilities objected to initially. They include dropping intensity-based standards from greenhouse gas emissions limits.

That means generators would no longer be forced to meet a single standard of how much carbon is emitted per unit of energy. Instead, each generator would be assigned an annual emissions limit.

Companies that own a number of generators would also be allowed to pool emissions from facilities operating in the same jurisdiction. Companies would also be allowed to buy carbon offsets to compensate for overshooting their assigned limits.

The government is also considering changes to how new plants are brought in under the regulations.

Under the previous scheme, operators were concerned about the requirement that all generation would have to either be renewable or be equipped with carbon abatement by 2035. They argued that projects already under construction would be disadvantaged and could be left stranded once the new rules took effect.

The government now proposes a time-limited exemption to that rule for fossil fuel generators that come into operation before 2025. A spokesperson for Environment and Climate Change Canada said there could be some “wiggle room” on the start date.

Industries that generate their own power and feed extra back into the grid are also affected by the proposals. Previously, all generated power would have been affected by the regulations.

Under the suggested changes, only the power that gets fed back into the grid is affected. Power generated and used on-site would not be.

Finally, small generators producing under 25 megawatts would still be exempted. But any new units at the same facility collectively generating more than that would have to follow the regulations.

Confident on climate goals: Guilbeault

Jason Dion, senior research director for the Canadian Climate Institute, wrote in a statement that the revised design was a “welcome change” that will deliver more flexibility for grid operators. Dion was a part of the government’s electricity advisory council.

“Finalizing the regulations as early as possible would give policy certainty to grid operators, which would help with planning and investment,” said Dion, whose organization focuses on climate change policy research.

When asked by CBC News whether the changes would affect Canada’s climate goals moving forward, Guilbeault said the analysis is still ongoing in regards to what’s being proposed.

“There’s a number of options that have been put on the table. We won’t necessarily use all of them, but we certainly wants to hear people’s views on all of them,” he said.

“I’m confident that when we finalize the regulations, we will be very close to our initial target and that this very important piece of regulation will enable Canada to reach its 2030 goals, en-route to a 2050 net-zero country.”

Andrew Leach, who is an energy and environmental economist and a professor at the University of Alberta, said he was pleased to see that the government was showing flexibility on some key areas.

“I still worry about any annual limit, since we want plants to have the same [flexibility] in December as they have in January,” Leach wrote in an email to CBC News. 

“I think this does have the potential to move the federal [regulations] even closer to ones that would accomplish the Alberta government’s stated goals on the Alberta timelines, which will be interesting.”

The government is continuing to collect feedback on the new regulations until March 15 and intends to publish the final regulations later this year.