On August 8, 2023, Minister Wilkinson announced a new paper: Powering Canada Forward, which outlines the federal government’s vision for transforming Canada’s electricity sector, with goals to decarbonize our grids by 2035 while keeping electricity systems reliable and costs affordable. This vision will be articulated in the Clean Electricity Strategy, which will be launched in 2024.

On August 10, 2023, Minister Guilbeault announced the Draft Clean Electricity Regulations, which will require all provincial grids to be net-zero by 2035, and will be a key pillar of the Clean Electricity Strategy. A public consultation period on the Draft Regulations ends on November 2, 2023, and the Regulations are expected to be finalized in 2024.

Draft Clean Electricity Regulations:

Public consultations for the Clean Electricity Regulations began in 2022, with the Draft delayed by several months as the federal government worked with provinces and utilities to add flexibility to what was originally proposed.

The Draft Regulations essentially limit utilities using fossil fuels to generate electricity beginning in 2035. Any new generating unit (over 25 MW in size) would need to produce less than 30 t of CO2 emissions per GWh. The Regulations also propose to stop building new emitting fossil fuel electricity generation units beginning in 2025. Those units continuing to operate in 2035 and beyond are limited to operating 450 hours annually and/or emitting 150,000t of CO2 per year. Generating units using fossil fuels combined with carbon capture, storage and utilization (CCUS) will be allowed with additional requirements.

This effectively means new electricity generation beyond 2025, whether to replace old generation assets or to help meet growing demand, must be non-emitting. Utilities must rely on renewable sources including wind, solar and hydropower, as well as non-emitting sources including nuclear, natural gas with CCUS, biomass and other biofuels.

Powering Canada Forward and the Clean Electricity Strategy:

While much of the content in the Powering Canada Forward document has been previously announced or discussed by the federal government, one important note is that billions of federal funding programs to help the energy transition may be subject to provinces taking action to reduce emissions:

The federal government is working to implement its new funding commitments in partnership with provinces and territories, and in a way that supports affordable net-zero electricity across Canada. The federal government will make these tools available to provinces and territories that take concrete action to achieve net zero. This includes demonstrating a commitment to use federal funding to lower electricity bills for households and businesses, and a commitment to achieve a net-zero electricity sector, which will apply to the Clean Electricity Investment Tax Credit and potentially to other federal instruments.

Consultations for the Strategy will take place over the coming months and the recently appointed Canada Electricity Advisory Council will provide its advice in a final report in 2024.