Consultation on the Canadian Clean Electricity Standard is underway | Bennett Jones LLP

The Government of Canada (through Environment and Climate Change Canada) has launched a consultation through the publication of a discussion paper, “A clean electricity standard in support of a net-zero electricity sector: discussion paper(the Federal Paper), to solicit comments on a Clean Electricity Standard (CES) under the Canadian Environmental Protection Act, 1999 (CEPA). The consultation supports the Federal Government’s stated goals of moving to net zero electricity supply by 2035 (NZ2035) and achieving economy-wide net zero emissions by 2050.

Deadline for comments

As this document is essential for the electricity sector, many industry participants will be aware of the deadline for comments, however, comments on the discussion document must be submitted by April 15, 2022 to ECD [email protected]

General summary of the federal document

The federal government says that while the provinces have jurisdiction over electricity planning and operation, the federal government has jurisdiction over emissions reduction regulations. The document states that CES aims to provide regulatory signals to support decision-making at the provincial level.

In order to minimize investment in assets stranded due to the long life of power generation assets, CES is intended to send clear regulatory signals discouraging new investment in assets that the federal government believes could be locked in the coming years by the transition to net zero.

CES will recognize recent and emerging technologies as critical to this transition, including CCUS, hydrogen, small modular reactors (see our recent blog on SMRs), energy storage, wind and solar power and inter-provincial/territorial transmission on a large scale, recognizing that gas-fired generation will be a necessary form of low-emission generation for some time to come.

The Federal Government expects capital investment needs to be very large to achieve the NZ2035 targets. CES must establish regulatory certainty to facilitate the way for such large capital investments.

The paper warns that carbon pricing alone will not be enough to ensure the electricity sector reaches NZ2035, and the government is of the view that a pan-Canadian CES demanding the phase-out of all electricity generation at from conventional fossil fuels will complement the carbon pricing mechanism.

Requested input domains

The Federal Government is seeking comments on Federal regulatory measures to support its stated target of NZ2035. They posed numerous questions in the federal document covering a wide and complex set of considerations, including, to name a few:

  • implications for offset credits available through federal, provincial/territorial or other programs;
  • reflection on the evolution of carbon pricing applicable to the production of electricity;
  • strategies for minimizing tied up assets and associated impacts on rates;
  • use of natural gas, including cogeneration before and after 2035;
  • considerations for different electricity markets, vertically integrated utilities, etc. ;
  • treatment of production technologies and negative emissions based on biogas; and
  • impacts on electricity generation in remote, northern and aboriginal communities.

Regional differences

This ECS is expected to be hotly debated, as electricity generation in Canada differs significantly from region to region and therefore the impacts of an ECS will be the greatest. in Alberta, Saskatchewan, New Brunswick, Nova Scotia and Ontario, where electricity generation depends on fossil fuels. fuels.

Next steps

Environment and Climate Change Canada will continue its process of engagement with provinces, territories, Indigenous peoples and electricity sector stakeholders to inform the regulatory development of a transition to net-zero electricity generation from by 2035 in Canada.

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