The Liberals promise billions for clean power. Don’t undermine it with politics

Open this photo in gallery:

In the summer of 2022, U.S. President Joe Biden’s ambition to deliver landmark climate legislation looked like it was dead – until the plan experienced a sudden political resurrection on Capitol Hill. The machinations in Washington have reverberated in Ottawa ever since.

Mr. Biden’s legislation, in an artful semantic leap, was dubbed the Inflation Reduction Act. The title belied the bill’s climate focus: an investment of several hundred billion dollars of public money centred on cleaning up the American electricity grid, powered by fossil fuels.

The cost to keep up with the Americans is a big one. Ottawa has a suite of investment tax credits in various stages of development. In Finance Minister Chrystia Freeland’s budget speech this month, she tallied the value of various climate tax credits at $93-billion.

Two of the tax credits, for carbon capture and clean technology, are part of legislation on Parliament Hill. But a key initiative is still only slowly – very slowly – taking shape, the plan to create a clean electricity tax credit, announced in last year’s budget. The idea is a good one, but the Liberals risk undermining its potential with unnecessary conditions that inject too much politics into policy.

Canada already benefits from a bounty of clean electricity and hydro-powered provinces such as British Columbia and Quebec have in recent months announced major plans to expand their grids with renewable power such as wind. Adding a lot more clean power will help slash greenhouse gas emissions across the economy, from transportation to home heating. Canada starts with an advantage but needs to make sure jurisdictional infighting doesn’t squander it.

The federal budget estimated the clean electricity tax credit, available to private companies as well as provincially owned entities, will run as high as $32-billion through 2035, up from an estimate of $26-billion last year. The money is for everything from wind and solar to energy storage projects and natural gas with carbon capture.

But several proposed conditions have been attached to the money. They were first floated last year and reiterated in this month’s budget. They deal with money that would go to a provincial Crown corporation.

Ottawa doesn’t get specific but picture SaskPower, which runs a power grid reliant on fossil fuels in a province whose conservative premier is no fan of Liberal climate plans. The clean power money would hinge on a government to “publicly commit” to working toward a net zero power grid by 2035. The second provision would require the likes of SaskPower to, as Ottawa puts it, pass through the value of the tax credit to lower power bills for consumers.

The broad, long-term goal of clean power is obviously to cut fossil fuels from the grid and to potentially lower the cost of electricity. But making the money to achieve such goals contingent on a pledge of allegiance doesn’t make sense.

Focus on the policy win, instead of trying to twist dissenters to your side of the political argument. If SaskPower proposes the country’s largest solar farm, and Ottawa’s money can make it happen, does it matter if Premier Scott Moe isn’t fully on board with the Liberals’ climate agenda? If Manitoba Hydro wants to build an interprovincial transmission project with Saskatchewan, but can’t promise immediately lower rates, why would Ottawa say no to such a proposal?

There is time for Ottawa to pivot. Consultations are planned with the provinces, and legislation is set to be tabled this fall. The Climate Institute advocates easing the funding conditions, as put forth by the Canada Electricity Advisory Council. It suggested provincial road maps to net zero, broadly, by 2050, rather than precise political allegiance to net zero power by 2035. The Canadian Renewable Energy Association emphasized the importance of speed, getting the legislation done, so companies can get to work.

In the U.S., the Inflation Reduction Act has helped unleash a torrent of private sector cash into clean energy – more than US$380-billion, according to a speech last week from John Podesta, a senior adviser to Mr. Biden for climate policy. This is the promise of such large public investments, that they will serve as a trampoline.

But the trampoline works best if there aren’t several ropes tied around the waists of funding recipients. Ottawa’s plan to invest in clean power makes sense. Adding unnecessary conditions – seemingly aimed at provinces where money is most needed to cut fossil fuels from the grid – is a mistake.