Energy and Natural Resources Minister Jonathan Wilkinson speaks during a press conference at the National Press Theatre in Ottawa on May 7.Sean Kilpatrick/The Canadian Press
A federally appointed panel on the future of Canada’s electricity sector is calling for Ottawa to move with both greater urgency and greater flexibility, in pursuit of a non-emitting grid capable of meeting power demand expected to double or even triple in the coming decades.
Among many recommendations in the final report of the Canada Electricity Advisory Council, appointed by Natural Resources Minister Jonathan Wilkinson last year, are to fast-track the implementation of new clean-electricity tax credits while expanding their scope, and to streamline permitting and regulatory processes to expedite project approvals that are unusually slow by international standards. That’s to enable approximately $1.4-trillion in capital investments needed by 2050, which it frames as a potential economic boon if the right policies are in place.
But it also calls for greater recognition, including in eligibility requirements for the tax credits and in Ottawa’s in-the-works Clean Electricity Regulations, that decarbonization must move at different speeds across Canada. Those calls are backed by analysis within the report suggesting that, while most Canadians will benefit from net energy-cost savings as renewable electricity replaces fossil fuels, the provinces of Alberta and Saskatchewan could experience higher costs than gains, as might some low-income Canadians countrywide.
The report, released on Monday, carries considerable weight because of the council’s composition. It features current or former executives from power utilities or planning agencies in nearly every province, along with First Nations Major Projects Coalition chair Sharleen Gale and sectoral experts. It comes as Ottawa is trying to get past backlash to its clean-electricity agenda, particularly in Western provinces, and build durable consensus around the need for massive investments in renewable power generation, storage, transmission and modernized distribution methods.
In an interview, Mr. Wilkinson praised the council for achieving that sort of consensus amongst its members and expressed openness to its proposals to minimize friction.
“To be honest, I agree with them,” he said. “In a country like Canada … one-size-fits-all is probably not the most appropriate way to proceed.”
Among the most striking of the proposals is to replace a contentious requirement that provinces and territories publicly commit to net-zero emissions grids by 2035 in order for their utilities to access a refundable federal tax credit for investment in non-emitting power sources.
The report calls for Ottawa to instead require publication of provincial and territorial energy roadmaps, showing paths to net-zero emissions by 2050, with five-year benchmarks.
Mr. Wilkinson said he likes the idea of encouraging plans tied to each province’s energy-sector reality, and called the substitution for the 2035 requirement in the tax credits “an interesting idea that the government will have to discuss internally.”
He was less encouraging about some of the council’s suggestions for expanding the tax credits’ scope. Those include broadening eligibility from primarily electricity-generation projects to also include transmission lines within provinces (as opposed to just between them, as Ottawa currently proposes).
The report also recommends the credits be extended to 2040, instead of 2034 as currently planned, in recognition of energy projects taking a long time to build. And it endorses calls for non-taxable entities such as public utilities and Indigenous corporations, which under Ottawa’s current proposals would receive a lower refundable tax credit than private developers, to instead receive the same rate.
While such changes could be considered down the road, Mr. Wilkinson said, the priority for now – amid sectoral impatience with slow implementation – is to get the credits in place at all. He also suggested that building out transmission lines might need to be addressed through other policy levers, because covering all such projects with a blanket tax credit would be too expensive.
On the subject of Ottawa’s Clean Electricity Regulations (CER), which would require a phase-out of natural gas (unless it has accompanying carbon-capture technology) for power generation starting in 2035, the report is much less specific. It simply calls for “substantively greater flexibility” than in the initial draft released last year.
In an interview, council chair Philippe Dunsky said that they didn’t want to get bogged down in the CER, which is a highly complex live debate. Nevertheless, Mr. Wilkinson said that a similarly broad call from the council for pragmatism, in an interim report last December, influenced the government when it subsequently released a discussion paper laying out various ways the regulations could be softened to enable more gas-fired power past 2035.
Ottawa is also in the midst of developing strategies to address the permitting backlogs cited by the council as a huge obstacle to clean-energy projects.
While the report acknowledges efforts under way, notably the establishment of a team within the Privy Council Office to co-ordinate project reviews across federal departments and agencies, it calls for additional measures.
Those would include a more pro-active effort by Ottawa to seek equivalency agreements, in which federal reviews are called off because provincial reviews met the same standard, and scrapping some environmental risk-assessment processes for each project in favour of developers being entrusted to meet more general compliance standards for all but the highest risks.
“We can throw all the money we want at it,” Mr. Dunsky, who leads a Montreal-based energy consulting firm, said of clean-energy investment. “But if we still have a gummed-up system that adds three or four or five years unnecessarily to timelines for projects, then we’re just spinning our wheels.”
The report also sets out a range of other ways the federal government could speed the country’s energy transition.
One of those would address the long-standing reluctance of provinces to transmit power between each other. The council proposes that Ottawa work with provincial governments to develop a framework for transmission projects that cross their boundaries, including assessments of costs and benefits for each province, which it could use federal dollars to help balance out.
Another, which Mr. Wilkinson said the report has prompted the government to consider, is to refocus an existing federal grants program away from wind and solar-generation projects (which are increasingly affordable anyway), toward demand-management programs involving new technologies that enable supply to be distributed more efficiently.
The report includes many more such granular proposals, including others similarly aimed at improving energy efficiency, which could be especially important for reducing cost burdens for low-income households.
But Mr. Dunsky stressed the council is also trying to send a high-level message about the economic opportunity to build upon what, by global standards, has to this point been a relatively low-carbon electricity supply, and the need to get past partisan posturing that has recently defined Canada’s energy discourse, to not be left behind by other countries moving swiftly to modernize their systems.
“It’s such a transformative thing,” he said, “that if we don’t do it seriously and pragmatically, we’re going to lose to someone else who does.”