Environment and Climate Change Canada (ECCC) today released a discussion paper, “A Clean Electricity Standard in support of a net-zero electricity sector” (the Discussion Paper), as part of its first steps in developing and consulting on a Clean Electricity Standard (CES) under the Canadian Environmental Protection Act, 1999. This bulletin summarizes key details of the Discussion Paper and provides important information on ECCC’s consultation on developing a CES.
Purpose. The Discussion Paper indicates that its purpose is to support the government’s intention to introduce regulations to achieve a net-zero electricity system by 2035 and invite comments regarding the scope and design of the CES. The Discussion Paper notes that Canada’s electricity system is currently 82% non-emitting but remains Canada’s 4th largest source of emissions, accounting for 8.4% of total greenhouse gas (GHG) emissions in 2019.
Proposed CES Regulations. The Discussion Paper notes that carbon pricing will be insufficient to ensure that the electricity sector achieves net-zero emissions by 2035 or likely even by 2050. Therefore, a nation-wide CES regulation will complement carbon pricing by requiring the phase-out of all conventional fossil fuel electricity generation and incentivizing fuel switching in other sectors. The scope and design of the CES regulations will also need to provide enough compliance flexibility to allow for the use of natural gas for emergency events, back-up power to complement renewables, and supplying power during seasonal peaks of demand. The proposed CES regulations may, among other things:
- apply to all sources of emitting electricity generation that sell to the grid;
- transition the electricity sector to net-zero by 2035 while providing increased supply of electricity to support electrification and the role of available technologies in the provision of clean power to Canadians;
- be stringent enough to achieve its objectives while including compliance flexibility, such as robust GHG offsets, and allow for the possibility of some natural gas;
- be drafted in a technologically neutral manner; and
- ensure that the CES and the treatment of electricity generation under the federal Output-based Pricing System Regulations are synchronized.
Collaboration with provinces and territories. ECCC’s consultations on the design of the CES will be guided by the importance of Canada-wide collaboration, with provinces and territories managing several factors, including:
- the technical challenge of integrating wind and solar into the electricity system while maintaining reliability and de-risking intermittency challenges;
- the management of system-wide impacts of increased demand as electrification links more end-uses to the electricity system;
- the cost-effective deployment of emerging non-emitting options like long- and medium-duration energy storage alternatives, geothermal and SMRs; and
- providing incentives and programming for energy efficiency and demand-side management to minimize overall demand and help consumers reduce their electricity consumption, reducing their exposure to rate increases.
Complementary federal action.The Discussion Paper also notes additional federal actions and complementary policies specific to the electricity sector, including:
- investing $964 million over 4 years to advance smart renewable energy and modernization projects for electricity systems, to enable the clean systems of the future;
- investing $300 million over 5 years to support providing the opportunity for rural, remote, and Indigenous communities that currently rely on diesel to be powered by clean, reliable energy by 2030;
- supporting necessary intertie project pre-development work by providing $25 million in 2021-22; and
- working with provinces and territories to help build key intertie transmission projects with support from the Canada Infrastructure Bank.
Consultation. ECCC is seeking feedback and input regarding federal regulatory actions to support net-zero electricity generation by 2035. Interested stakeholders are encouraged to comment on the Discussion Paper by providing written comments by April 15, 2022.
ECCC will also be engaging with provinces, territories, Indigenous Peoples, utilities and other electricity sector stakeholders, industry, non-governmental organizations, and Canadians on regulatory design and the Discussion Paper.
For further information on the contents of this bulletin or for assistance with preparing comments, please contact Lisa DeMarco at lisa@resilientllp.com.
