Ottawa’s new plan to force fossil fuels out of electric grid slammed as costly, ‘unrealistic’

OTTAWA — Environment Minister Steven Guilbeault’s newly announced plan to largely phase out the use of fossil fuels to generate power in Canada over the next 12 years is being criticized as costly and unrealistic, despite his claims that higher electricity costs would be offset by savings on oil and gas.

On Thursday, Guilbeault introduced details of the Liberal government’s draft regulations for how it plans to achieve its goal of a “net zero” electricity grid by 2035, and will begin a consultation on those plans later this month for 75 days, with a final version expected to be published in January 2025.

The draft regulations unveiled by the Liberal government on Thursday are meant to switch most of the remainder of Canada’s power grid to non-carbon-emitting sources, while also meeting increasing demand from more electricity usage.

“We know the scale of the challenge ahead of us and I know some will cast out on the challenge arguing that we would be better off sticking to the status quo,” said Guilbeault on Thursday during a press conference at the University of Toronto.

Environment and Climate Change Canada officials said in a technical briefing that the national average household energy bill would increase by between $35 and $61 per year when the regulations are adopted. But it projects that the increase would be offset by savings when consumers reduce their dependency on fossil fuels, for instance the savings from the cheaper cost of recharging an electric vehicle (EV) compared to filling up with gasoline.

The new regulations will cap carbon emissions for individual power plants that would either require them to find ways to capture carbon emissions or they will have to phase out operation.

Carbon capture, while currently in use in several pilot programs, is still widely considered by energy industry analysts to be unproven as an economic technology at a larger scale.

Remote and northern communities would be exempted from these rules by the time they are enforced in 2035, as federal departments are helping them “reduce and potentially eventually eliminate their dependencies on fossil fuels,” said Guilbeault.

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

Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute and special adviser to the Business Council of Canada, said the federal Liberals are choosing to go “much faster and further than what anyone else thinks is logistically or economically possible.”

Guilbeault said Thursday that the federal government has made available over $40 billion over 10 years to enable provinces and utilities to invest in clean electricity, including measures like tax credits, low-cost financing and other funds to reduce the cost to consumers.

“We estimate that if provinces, territories and Indigenous partners take full advantage of these measures, the federal government will offset more than half of provinces and territories’ cost of cleaning the grid,” he said.

But the federal Environment Minister’s arguments did not convince provinces such as Saskatchewan and Alberta, both confirming they would not adopt the proposed clean electricity regulations and would instead aim to achieve net-zero by 2050.

Saskatchewan Premier Scott Moe said Thursday the draft regulations are “unaffordable, unrealistic and unconstitutional,” and that he would oppose the new rules.

“They will drive electricity rates through the roof and leave Saskatchewan with an unreliable power supply. Our government will not let the federal government do that to Saskatchewan people,” Moe said in a post on social media.

Moe said electricity generation is a “constitutionally-protected provincial responsibility.”

“Trudeau’s net-zero targets are simply not achievable in Saskatchewan, and we will not ask our residents to pay the extraordinary price for the federal government’s divisive policies, nor will we risk the integrity of our provincial power grid to defy the laws of thermodynamics,” he said.

Alberta Environment Minister Rebecca Schulz blasted the federal government for putting “ideology before common sense, affordability and reliability”, and said “they will not be implemented in our province, period”.

“Once again, these regulations seem to completely disregard how the electricity systems actually work in provinces like Alberta,” she said.

The regulations are expected to result in a reduction of “nearly 342 megatonnes of cumulative greenhouse gas emissions” from 2024 to 2050, the government said.

The draft regulations don’t prescribe specific technologies that have to be used to reduce emissions, leaving provinces, territories, and municipalities to find ways to comply, according to a background document.

Provinces including Saskatchewan and Alberta, who rely heavily on fossil fuels as a baseload power supply, had previously expressed concerns about the government’s plans for the regulations. While the new regulations don’t apply to the provinces directly, many electrical utilities in Canada are provincially or municipally owned.

“By regulating these changes in the decision-making now, you can ensure polluting power plants can be phased down over 20 years, while allowing them to run where they have the greatest value for keeping electricity affordable and reliable,” Guilbeault said.

It’s unclear what consequences those provinces or municipalities could face for not complying.

A document provided by the government says only that “contravention of applicable rules (would) be punishable by appropriate penalties, such as increased fines and jail time.”

But the Canadian Climate Institute argued the new regulations will save Canadians money over the long run.

“Our research finds most Canadians will save on energy bills as they switch from fossil fuels to clean electricity, with the average household spending 12 per cent less on energy by 2050 compared to today,” senior research director Jason Dion said in a press release.

All G7 countries have promised to reach net-zero in their electrical systems by 2035, Dion pointed out.

“Canada’s future climate progress depends on clean electricity, and switching to 100 per cent non-emitting power will be a major part of our global contribution to lowering emissions,” Dion said.

Lisa Baiton, the CEO of the Canadian Association of Petroleum Producers, issued a statement Thursday warning that the regulations would limit the ability to use natural gas as a back up when wind and solar are unavailable.

“Canada produces some of the world’s lowest-emitting natural gas and is a critical part of our country’s energy security, including acting as a back-up for the intermittency challenges of renewable power,” she said. “We are also concerned that the proposal will have investment impacts, causing further uncertainty in the Canadian energy sector.”