Ottawa to allow facilities to stay open beyond 2035, despite pollution

This article was written by Alex Ballingall and Rob Ferguson, and was published in the Toronto Star on August 11, 2023.

The federal government’s new proposed rules to remove greenhouse gas emissions from Canada’s power grids will allow natural gas-powered plants to stay open — and keep emitting planet-warming pollution — beyond 2035.

That’s the year the governing Liberals promised to stop new emissions from the country’s electricity sector.

But the signal that Ottawa intends to give some wiggle room to gas plants under its new “clean electricity regulations” didn’t fly with at least three provinces that generate electricity by burning fossil fuels.

At Queen’s Park, Premier Doug Ford’s government pushed back at the proposed measures, saying those aimed at natural gas-fired power plants are too stringent.

“The current draft regulation has provisions that would impede an orderly energy transition, and could slow the electrification of our economy by compromising the reliability of the grid and increasing electricity costs this decade,” said Palmer Lockridge, a spokesperson for Energy Minister Todd Smith.

Prairie leaders went further, claiming Ottawa was trampling into an area of provincial jurisdiction. Alberta Premier Danielle Smith called the regulations “unconstitutional” and “irresponsible.” Saskatchewan Premier Scott Moe wrote on social media that the rules were “unaffordable, unrealistic and unconstitutional.”

In an interview with the Star, federal Environment Minister Stephen Guilbeault brushed off such criticism and defended the regulations. He said they were designed to minimize increases to electricity bills, with considerations for regions with higher amounts of gasfired power feeding their electricity grids.

He said Ottawa could have proposed stronger rules to reduce emissions even further, but that the government didn’t want to force power plants to shut down or to drive up electricity bills.

As it stands, the government expects the regulations will only increase the average residential electricity bill by about two per cent by 2040 — an increase Guilbeault called “minimal.”

“Could we have been more aggressive with the end-of-life for existing gas plants? Yes — but it would have come at a cost,” Guilbeault told the Star on Thursday.

“So we recognize that there will be residual emissions in 2035.”

Electricity generation was responsible for almost eight per cent of Canada’s total greenhouse gas emissions in 2021, representing a total of 52 megatonnes of air pollution, according to federal figures. Guilbeault said the draft regulations, as written, would reduce that to “less than 10 megatonnes” by 2035.

A variety of factors and policies, from the increasingly stringent minimum carbon price to actions by provincial governments and technological advancements, could reduce that even further, Guilbeault said.

The idea behind the regulations is to ensure the electricity Canadians use to power their lives — in everything from switching on the lights to charging an electric car — doesn’t make the climate crisis even worse. The government also wants the country’s power grids to be considered clean, as it expects more industries will want to stop burning fossil fuels and plug into emissions free power grids for their energy needs in the coming years.

In releasing the draft electricity regulations Thursday, government officials said the new rules could create $29 billion in economic benefits by 2050, through the creation of jobs retrofitting existing power plants and from savings that result in ditching more volatile fossil fuels for cheaper electricity.

Ottawa is also proposing rules it says are “technology neutral,” meaning fossil fuels can keep feeding power grids even after the regulations kick in.

Under the draft regulations, any facility built before 2025 would avoid the new rules until 20 years after it was commissioned. That means a gas plant that came online next year would get to continue as normal until 2044, although it would have to pay the required carbon price on its emissions in the meantime. Gas plants will also be able to keep providing electricity in emergencies and during periods of peak demand, while the new rules won’t apply for remote communities in the north and rural areas.

Otherwise, a new “emissions standard” would apply to power plants starting in 2035. Officials said the standard would ensure emitting power plants use emerging technology to capture 95 per cent of their emissions, something the government sees as “achievable.” Electricity facilities that don’t meet the new rules could face financial penalties, the officials said.

Clean energy policy experts welcomed the draft rules on Thursday, including Evan Pivnick from the British Columbia-based think tank Clean Energy Canada, who spoke alongside Guilbeault in Toronto and hailed the rules as “historic.”

Jason Dion, senior research director for the Canadian Climate Institute, said the new rules will help the economy and fight climate change at the same time.

Yet some environmentalists expressed concern that the rules allow natural-gas fired power to keep supplying electricity. Stephen Thomas, clean energy manager with the David Suzuki Foundation, said the regulations as written “will allow more (fossil fuel-powered plants) to be built and continue to supply electricity on the grid.”

The group Environmental Defence said Thursday that no natural gas-fired power plants should be allowed to operate after 2035 except for during “real emergencies,” and called on Ottawa to remove “loopholes” in the regulations that would allow for carbon capture of gas plant emissions.

The regulations are the result of a promise the Liberals made during the 2021 to ensure Canada’s electricity grids, which are already 84 per cent emissions-free, are responsible for no new greenhouse gas emissions by 2035.

The Canadian Climate Institute predicts the country’s electricity needs could more than triple by 2050, as industries, drivers and households shift from burning fossil fuels to using power grids for their energy needs. The federal government expects the required buildup of electricity systems will cost a total of $400 billion by 2050.

To help provinces get there, the federal government is creating a new tax credit that officials expect will cost $6.3 billion over the next five years, and then another $19.4 billion by 2035. Described as the “backbone” of the government’s plan to spur a faster shift to a green economy, the credit will see federal dollars refund up to 15 per cent of the money a private company — or provincial power utility — spends on “non-emitting” electricity generation systems, like hydro dams, nuclear power stations, and wind and solar energy projects.

In Ontario, the province’s Independent Electricity System Operator (IESO), which co-ordinates the daily operations of the electricity system, said it’s hard to beat gasfired power plants for reliability and flexibility.

They are needed as a “bridge” to newer carbon-free sources of electricity such as small modular nuclear reactors now under development, pumped storage of hydroelectric power and the possibility of more larger nuclear plants, said Chuck Farmer, a IESO vice-president.

Could we have been more aggressive with the end-of-life for existing gas plants? Yes — but it would have come at a cost. So we recognize that there will be residual emissions in 2035.

STEPHEN GUILBEAULT FEDERAL ENVIRONMENT MINISTER