The Trudeau government campaigned on a promise to make Canada’s electricity supply net-zero by 2035. Such a policy is critical, because absent regulation Ontario’s grid is poised to get a lot dirtier as we ramp up the use of fracked gas. In fact, based on current Ontario energy policy, carbon pollution from electricity is forecast to increase 400% by 2040.
To address this commitment, earlier this year the federal government released a discussion paper to outline considerations for net-zero electricity and to solicit comments from Canadians. More recently, the government followed up with the Proposed Frame for the Clean Electricity Regulations, and is now seeking further input.
Electricity is the fourth largest source of carbon emissions in Canada, and demand for electricity is growing as we electrify buildings and transport. Investments made today in power generation will have direct impacts on our ability to achieve Canada’s 2035 net-zero electricity target due to the long lifespan of power generation assets.
Overall, we recognize this regulation as an excellent step to discourage carbon lock-in and to open up opportunities for a cleaner, more affordable, more reliable electricity system across Canada. A planned transition will insulate Canadians from the increasing volatility of fossil fuel prices, reducing long-term energy price inflation.
The Clean Electricity Regulation (CER) is an important signal to industry and other countries that Canada is committed to transforming our electricity grid. We strongly support the proposal to set a mandatory carbon intensity standard (tonnes per gigawatt-hours). We also appreciate the exemption given to small and remote communities to protect their economic interests as they may have limited non-emitting options. Additionally, we support the consideration for the exemption when emergency situations arise.
While we support the general direction of the discussion paper and proposed framework, we have three key concerns and recommendations:
- Implement a 2030 interim target. The 2035 target is more than a decade away, risking a long gap without accountability. An interim target will provide a checkpoint to ensure Canada is on track to its 2035 target. Moreover, the long lead time produces considerable uncertainty due to changing governments. Additionally, it will provide businesses and industry with a predictable benchmark to guide their trajectories, ensuring they are on track in time to reach the target.
- Carbon offsets should be high-quality and additional. The CER will have both a mandatory carbon intensity standard (tonnes/GWh) and a financial compliance mechanism for any remaining carbon emissions, which will likely be in the form of purchasing carbon offsets. It is critical that any carbon offsets used for compliance purposes are high-quality, additional, and unique. Carbon offsets should only be generated by projects that would not have occurred without the purchase of the offset. This means disallowing offsets based on projects required by other regulations, or producing offsets for other regulated or unregulated markets.
- Canada should consider implementing full lifecycle analyses for the use of hydrogen. The framework mentions the potential use of hydrogen as a “non-emitting” alternative to fossil fuels. Hydrogen types vary in their carbon intensity. Grey hydrogen, the most commonly used, is created from fossil fuels and releases more carbon emission than natural gas. Allowing the use of grey hydrogen for CER compliance would be counterproductive. Blue and green hydrogen are more sustainable. Given the variance in their sustainability levels, all hydrogen types shouldn’t be treated the same. Due to the high carbon intensity of grey hydrogen, at a minimum, it should be excluded from use as a compliance mechanism for this policy.
We’re encouraged to see this framework, as it signals the federal government intends to implement a strong clean electricity standard that will help Canada’s electricity grid be net-zero by 2035. On the journey to net-zero electricity, we urge the government not to get caught in the ‘net’ by allowing the use of low-quality carbon offsets or high-carbon grey hydrogen for compliance. We also hope to see an interim target implemented to ensure the regulation is on-track.
While this regulation is promising, there are many entrenched interests calling on the government to delay or dial back its ambition. It’s critical that the government also hear from other voices, especially the many cities across the country that are relying on a clean electricity system to meet their climate targets. You can submit comments on the CER proposed framework before August 17th by emailing them to ECD-DEC@ec.gc.ca. There will also be an opportunity to comment on the completed regulation when it’s released in December 2022.
See TAF’s letter submission on the CER proposed framework.