The Canadian energy regulatory landscape is evolving in response to a variety of public policy, scientific and technological changes. In a recent development, the federal government of Canada has released a comprehensive set of regulations aimed at overhauling the electricity sector and fostering the growth of clean energy.
Canada’s commitment to reducing greenhouse gas emissions and transitioning to cleaner energy sources has gained momentum in recent years. The federal government released a plan on August 8th, 2023, titled “Powering Canada Forward,” which lays out an ambitious roadmap for the transformation of the electricity sector. The goal is not only to reduce emissions, striving for the net zero marker, but also to create a more resilient, efficient, and equitable energy system.
To complement the Sustainable Future Plan, the federal government announced on August 10th that they would be implementing a new set of Clean Energy Regulations (CERs).
New CERs target what can be considered some of the major sources of greenhouse gas (GHG) emissions, while the Powering Canada Forward Plan covers the broad strokes of what it will take to get Canada to net zero emissions.
New and notable CERs include:
- Prohibiting electricity generation units emitting more than an annual average of 30 tonnes of carbon emissions per GWh (gigawatt hour) of electricity generated over a calendar year;
- In 2025, all eligible units are obliged to undergo registration with the Federal Ministry of Environment and Natural Resources. This registration is aimed at showcasing their understanding of the relevant performance standards. Subsequently, they are required to submit specific information as prescribed, facilitating ongoing monitoring, ensuring compliance, and enabling enforcement activities; and
- Annual reports, which should include details such as the number of electricity production hours and the volume of emissions generated during the preceding calendar year. These annual reports must be submitted by the following June 30th.
CERs are intended to work in tandem with the Powering Canada Forward Plan to accomplish a number of things, including introducing stricter energy efficiency standards, pivoting toward lower-emitting energy sources, and building a stronger electric vehicle infrastructure, to name a few. The Plan and CERs demonstrate the ways in which the federal government is attempting to leverage its regulatory power over provinces and territories’ energy sectors in order to move forward on their carbon-neutral goal.
The federal government plans to incentivize research and innovations in clean energy technologies. Modernizing Canada’s power grid, and making it more reliable, is also a key priority, particularly at the provincial level, which has constitutional jurisdiction and responsibility in this area.
However, the Plan and CERs face considerable opposition from key stakeholders across Canada, and it is uncertain whether they will ever be fully implemented.
Alberta’s representatives have been particularly vocal with their concerns. The Plan is at least temporarily inconsistent with the Alberta government’s recently declared halt on new renewable projects exceeding 1 MW (megawatt), which is scheduled to continue until February 29, 2024. Nor does it discuss the concerns expressed by the Alberta government regarding the impact of substantial intermittent renewable energy generation on grid stability and how this might influence the development of Canada’s Clean Energy Electricity Strategy expected to be unveiled in 2024. In addition, the government of Saskatchewan, opposition parties at the federal level, and a variety of stakeholders in the private sector have dismissed the proposals as unrealistic and inflationary.
These regulations will be costly to implement in a short time frame, leaving many concerned that even if they could be implemented in the period suggested it would prompt very real concerns about the reliability of the grid. The overarching criticism of these regulations is that they are simply unrealistic and unlikely to achieve what they purport to do.
Pushback coming from Canada’s provincial governments, federal opposition parties and the private sector prompts us to ask if there will be a second iteration of this sustainability strategy and what it will look like. Will we see exemptions and flexibility in the implementation phase, or will these regulations be fundamentally changed or abandoned? As the situation develops, the latter options appear most likely.
There are emerging opportunities in several areas of the energy complex. Change is a constant in this sector as a result of innovations in science, technology and public policy. Canada’s success in seizing these opportunities depends on a sensible, coherent and predictable policy that emphasizes reliability, cost and environmental concerns. As these policies continue to take shape, it is important for energy companies and legal professionals to stay informed.
If you are looking for legal professionals to help you and your business navigate potential regulatory changes in the energy sector, we can help. Caravel has a team of over 90 qualified and experienced lawyers, including those specializing in energy law, who can support you through industry changes. Get in touch with our team today to find out more.