The federal government is considering major changes to its plan to reduce carbon emissions from Canada’s electricity grid, responding to months of backlash from provinces that rely heavily on power generated from natural gas, particularly Alberta and Saskatchewan.
The possible changes, laid out in a discussion paper released by Environment Minister Steven Guilbeault on Friday, would soften Ottawa’s draft Clean Electricity Regulations, which aim to phase out gas-fired power plants that lack carbon-capture technology starting in 2035.
The paper says Ottawa is open to considering allowing power generators more flexibility to continue operating such facilities past that date. It says this could include setting annual emissions limits for individual facilities, rather than requiring them to meet a sector-wide performance standard. The paper also proposes allowing the purchase of carbon offsets when those limits are exceeded.
In an interview, Mr. Guilbeault said Ottawa’s commitment to achieving a net-zero-emission grid has not changed. He rejected the idea that the government is climbing down in the face of provincial opposition. “This is a totally normal process,” he said. “We put out draft regulations. We consult. We listen to what people have to say. And then we adjust. We do that all the time.”
The rules as originally written would have capped greenhouse-gas emissions from large power generation facilities at 30 tonnes per gigawatt hour, and forced plants with emissions above that level to remain offline, except under very limited circumstances.
But the discussion paper acknowledges that this would cause too much disruption to the system. Provinces have warned that such restrictions would raise the risk of blackouts, a concern that was amplified after power shortages in Alberta during last month’s extreme cold snap.
The energy sector has also warned that the cap would be too stringent to allow some facilities to stay open even with carbon capture, an evolving technology that, in its early incarnations, might reduce but not completely eliminate emissions.
Ottawa is now signalling that it may address these concerns through revisions to its draft regulations on several key points.
The original plan proposed banning all facilities above a certain emissions threshold from operating for more than 450 hours a year. Friday’s discussion paper says the government could instead set a more flexible maximum number of hours, using a formula that takes into account each facility’s specific emissions profile. The idea would be to allow relatively efficient gas plants to operate for more days than comparatively inefficient ones.
The changes proposed Friday would allow utilities or Crown corporations to pool the emission limits of their facilities within a jurisdiction, to give them more operational discretion, rather than forcing them to apply the rules to each plant separately. Offset credits would be allowed to stretch those limits up to a certain level, at which point the facilities would have to stop operating.
Ottawa is also considering a slight expansion of a grandfathering provision, which originally said that any plants already operational by 2025 would be exempt from the rules for 20 years from the date they were first commissioned. The discussion paper suggests that this might also apply to plants under construction by 2025, even if they’re not running yet.
The government’s willingness to alter its plans received some qualified praise from electricity-sector representatives.
“We’re happy to see a shift toward more flexibility,” said Michael Powell, the vice-president for government relations with Electricity Canada, an industry association. But he added that “the devil’s going to be in the details.”
Mr. Powell noted in particular that the group’s members will be waiting to see the specific formula for determining to what extent gas plants can operate, as well as how the offset scheme might work.
Some environmental groups had similar wait-and-see responses. Clean Energy Canada praised Ottawa for working constructively with stakeholders, but said it would need more details before it could determine whether flexibility is being achieved without compromising stringency. Others, such as Environmental Defence, were more critical of the government for weakening its plan.
There are early indications that the potential revisions will do little to quell the fierce constitutional battle that the regulatory plan has sparked. Electricity policy typically falls under provincial jurisdiction, and Alberta and Saskatchewan have argued that Ottawa is vastly overstepping its bounds by trying to impose rules.
Rebecca Schulz, Alberta’s Minister of Environment and Protected Areas, said in a statement that Friday’s shift is not enough to win over her province.
“This report makes no meaningful corrections to the most destructive piece of Canadian electricity regulation in decades,” she said. “The federal government is still proposing to violate Canada’s constitution.”
The regulations, Ms. Schulz said, still leave Albertans at risk of blackouts. “Tweaks won’t work, it must be scrapped entirely,” she added.
The Saskatchewan government echoed Alberta’s concerns.
“No tweaks or adjustments can adequately address the fundamental flaws in these regulations,” Dustin Duncan, the Saskatchewan minister responsible for the provincial utility SaskPower, said in a statement. “The stacking on of additional federal regulations in this area of exclusive provincial jurisdiction is neither helpful nor necessary.”
In November, Alberta Premier Danielle Smith deployed her government’s Alberta Sovereignty Within a United Canada Act for the first time, floating the possibility of creating a provincial Crown corporation with a mandate to defy the federal government’s proposed grid regulations. The act’s constitutionality has not been tested in court.
Beyond the jurisdictional complaints, both Alberta’s Ms. Smith and Saskatchewan Premier Scott Moe have framed the Clean Electricity Regulations as impractical. Ms. Smith has argued they would cost Alberta billions of dollars to implement, and could leave the province short on power during extreme hot or cold snaps.
On Jan. 13, in the midst of Alberta’s recent cold snap, the provincial government issued an emergency alert, asking residents to conserve power in order to avoid rotating blackouts. The Alberta Electric System Operator, which regulates the province’s grid, extended the request in the following days, but held off on broadcasting the message through the emergency alert system. Nathan Neudorf, Alberta’s Utilities and Affordability Minister, said at the time that four natural gas plants had failed in the cold snap, causing a supply crunch exacerbated by a shortage of power from renewables.
The federal government has denied that its proposed regulations would limit Alberta’s ability to generate power, but Friday’s policy update notes Ottawa is open to automatic exemptions from emissions limits during emergencies.
The proposed rules have also sparked concern in other provinces and territories where fossil fuels account for significant shares of power generation, including Nova Scotia, Nunavut and Ontario – although their governments have been more publicly circumspect.
Ontario responded on Friday by stressing that it has been working with Ottawa to address concerns about the draft regulations’ impacts on grid reliability, and will continue to do so.
“While today’s update demonstrates the federal government is making progress, more work is still needed to ensure these regulations address all of the concerns identified by Ontario’s expert system planners,” Palmer Lockridge, a spokesperson for provincial Energy Minister Todd Smith, said in a statement.
Ottawa expects to publish its Clean Electricity Regulations later this year. Friday’s discussion paper says consultations will continue, with feedback on the latest proposals due March 15.
Carrie Tait
Adam Radwanski