Commentary by Stephen MacMackin, Chair

Potential clean energy investments in Canada have been stalled. Francis Bradley, the President and CEO of Electricity Canada, recently commented “We’re kind of stuck in neutral right now and we need to get this into gear.”

Investment decisions have been waiting, in large part, for a clear path forward from the federal government. Future investment tax credits and other funding mechanisms for clean technology projects have been promised to ensure Canadian clean technology investments can compete with the robust tax incentives already in place in the United States.

One of these projects, which must soon ‘get into gear’ if it will happen at all, is the Atlantic Loop. The large Atlantic Canadian investment would see electricity transmission expand across the east coast region, including hydro power from Québec.

On Tuesday, March 28, the federal government released its 2023 Budget, which included a commitment to help fund the Atlantic Loop and outlined new financial incentives to accomplish this commitment. But no specific funding amount was announced for the Loop project. So, what does this mean for Atlantic Canada?

Research highlights the Atlantic Loop as a key regional transmission project

In January 2023, Nova Scotia Power released updated modelling from the Evergreen Integrated Resource Plan (IRP). The new modelling outlines scenarios with an Atlantic Loop installed in 2030 or 2035, both of which are found to be more cost-effective options for Nova Scotia than scenarios without an Atlantic Loop in place.

Nova Scotia Power’s modelling found the Atlantic Loop, if installed in 2030, could save Nova Scotia ratepayers more than $2.4 billion in 2025 dollars between 2025 and 2050 (with end effects), than a similar scenario with no Atlantic Loop in place. Furthermore, the Evergreen IRP research found cumulative emissions would be roughly 50 per cent higher for the province without an Atlantic Loop in place.

Fueling the potential for future clean investment

There are further benefits possible with an Atlantic Loop, including the potential to export future clean energy from the region back into Québec and New England. The project could encourage offshore wind and advanced small modular reactor development, among others, to create long-term energy jobs and bolster government revenues. Proceeding on the Loop project could unlock funding decisions from private sector investors, which may qualify for the new investment tax credits, among other federal funding programs.

Ensuring the coal phase-out by 2030 in Nova Scotia and New Brunswick is replaced mainly with renewables in the form of hydro energy supplied by Québec will also help green provincial grids in the short- to medium-term. Local industry would benefit by improving access to affordable clean electricity, helping companies meet increasingly relevant ESG goals or supply-chain requirements.

What could hit the brakes?

There are still significant hurdles to overcome if the Atlantic Loop is to benefit Atlantic Canadians.

The federal and provincial governments must ensure an affordable cost to utilities and ratepayers for the project to move forward. Access to capital is especially important for the federal government to address, several options were announced in the budget. Government funding in this case might also drive investment as a result of growing access to a clean electricity grid into new markets.

The Atlantic Loop is a large visible above-ground infrastructure development that will require federal and provincial governments cooperation to ensure early and active engagement with community stakeholders, indigenous communities and the public to lower the risk of construction delays and budget issues.

And last, but certainly not least, a strong commitment from the Atlantic provincial governments to cooperate on regional planning. The Loop will only provide additional benefit if there is alignment or compatibility between provincial energy policies, regulations and electricity market rules.

Accelerating clean energy development

The Atlantic Loop project would not replace the need to invest in additional domestic energy generation and sizable public infrastructure projects. Atlantic Canada’s utilities face the herculean tasks of phasing-out coal-fired electricity generation by 2030, meeting the incoming Clean Electricity Regulations by 2035, all while addressing a shift in consumer behaviour that will significantly increase the demand for clean energy.

An Atlantic Loop can play an important role in addressing each of these challenges, if it moves forward with accelerated cooperation, speed and a clear direction. With the release of the 2023 federal budget, many of the uncertainties might now be actionable.

Now is the time to shift this project into gear.