Ottawa’s clean-electricity strategy faces opposition from Prairie provinces

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Battle lines are being drawn as the federal government prepares to release new rules that will require provinces to stop relying on fossil fuels for power generation starting in 2035.

Although Ottawa will not publish its proposed Clean Electricity Regulations until this summer, Saskatchewan Premier Scott Moe pre-emptively attacked the policy this week, painting it as an ideological threat to his province’s energy security and implying that his government will mount a legal challenge.

Federal Environment Minister Steven Guilbeault did not back away from the argument. In a statement provided to The Globe and Mail, he accused Mr. Moe of “baseless and untrue” fearmongering, stressing that Ottawa is committed to grid reliability and affordability, as well as sustainability.

But with similar broadsides also launched this week in Alberta by the United Conservative Party, as it fights to hold power in a provincial election campaign, the challenges of imposing a one-size-fits-all electricity strategy on Canadian provinces became inescapable.

The flap has raised questions about how much Ottawa might need to compromise on its push toward a clean national grid. The federal government considers the change essential to achieving Canada’s climate targets and competing economically with the United States, which is also pursuing net-zero electricity emissions by 2035.

At issue is the continued role of natural gas as a power source. The federal government wants to restrict the use of the fuel, absent carbon-capture technology. Saskatchewan and Alberta rely on it more heavily than other provinces.

While Mr. Moe suggested the federal government’s plans could lead to sudden power shortages come 2035, Mr. Guilbeault’s designs are not as drastic as that.

Ottawa has indicated, including in a framework for the regulations published last year, that it will allow gas plants commissioned prior to 2025 to keep operating for an unspecified period of time past 2035, even without carbon capture. The government has also signalled that it will craft the rules in a way that will allow continued use of unabated gas during limited periods of peak electricity demand, and as an emergency fallback.

The government’s aim is primarily to discourage a rush toward new gas generation, as provinces prepare for soaring energy demand from the electrification of transportation, buildings and industry. It has also announced new federal tax credits intended to boost the attractiveness of investment in non-emitting power sources.

This premise is currently getting its first test in Ontario, where the looming regulations are influencing an effort to ink new gas-generation contracts.

But the longer-term implications may be greater in the Prairies, which helps explain this week’s rhetoric.

In Ontario, gas is mostly used at times of peak demand. It accounts for about 10 per cent of power generated annually, though that share will likely rise this decade.

By contrast, Saskatchewan now gets about 40 per cent of its power from gas. It plans to boost that reliance to help replace coal power, which also makes up roughly 40 per cent. Existing federal regulations require coal to be phased out.

In Alberta, which is further along in replacing coal, natural gas currently provides more than 60 per cent of the province’s power.

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Gas’s dominance in both those provinces may be tied partly to their large fossil fuel industries, and their political preferences. But it also correlates to a lack of other existing options. Unlike several other provinces (British Columbia, Manitoba, Quebec, Newfoundland and Labrador), Saskatchewan and Alberta are not rich in hydropower. Nor do they have installed nuclear capacity, like Ontario.

That leaves the two provinces’ paths to net-zero electricity – which their governments have said they’re pursuing, but with an eye to 2050 rather than 2035 – more reliant on technologies with uncertain deployment trajectories.

Those include carbon capture and storage. Saskatchewan’s Boundary Dam Station coal plant is home to a pioneering CCS project, although it has not hit its capture targets. In Alberta, there is optimism about a natural-gas CCS project moving forward at the province’s Genesee Generating Station. But it’s unclear how widely and quickly the technology can be deployed.

Saskatchewan is among the provinces that have shown more enthusiasm for small modular nuclear reactors, which would be better suited to its relatively small population than large-scale reactors. But that emerging technology has not yet been proven, and nuclear projects typically take a long time for permitting. All eyes are on a planned SMR installation at Ontario’s Darlington site.

As for wind and solar power, which Ottawa is most actively trying to encourage, both Alberta and Saskatchewan have considerable potential that they have begun to tap into.

But wind and solar still make up a small share of the supply mix, and their capacity will be partly contingent on the development of energy-storage technologies, to help make up for their intermittency.

A cause for optimism is that advances in clean-electricity technologies in recent years have outpaced previous forecasts. But that is counterbalanced by the fact that Canada typically builds new electricity infrastructure slowly.

“The speed at which these things can change between now and 2035, we probably underestimate it,” said Andrew Leach, an energy and environmental economist at the University of Alberta. “But 2035 is still really close.”

While all provinces face timeline anxiety to some extent, given the need to increase electricity supply in the coming decades while meeting federal requirements, Alberta’s and Saskatchewan’s situations point to how the dynamics vary.

In fact, they vary even between those two provinces. While their supply mixes are somewhat similar, their systems are almost polar opposites. Alberta has Canada’s most open electricity market. Next door, SaskPower has a monopoly.

In competitive power markets like Alberta’s, integrating more renewables has tended to lower power prices, because of reduced costs and less market concentration as new players emerge, said Sara Hastings-Simon, an assistant professor at the University of Calgary whose work focuses on the energy transition.

Ottawa has shown no inclination to explicitly set different standards for each province within the Clean Electricity Regulations.

Another way of accounting for differences between provinces might be to provide multiple paths to compliance, or to strike deals with individual provinces to lift the federal rules, if those provinces are deemed to have their own equivalent ones in place. Ottawa could also tailor the rules to the provinces with the toughest paths, making them easier for everyone else.

The pressure for answers is mounting. The widespread impression within the electricity sector has been that Ottawa is waiting until after the May 28 Alberta election to publish the draft regulations, to avoid stoking political fires.

In the meantime, politicians in that province and next door are offering their own interpretations.