John Ivison: A rational revolt against Ottawa’s top-down electricity regulations brews

This should have been a national action plan that, for once, was bottom up, rather than top down

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No one in federal politics truly appreciates the importance of reliable and affordable electricity supply to provincial voters.

“As any (provincial) elected official knows, political graveyards are littered with the bodies of those who ran afoul of public opinion over electricity,” wrote the authors of a Public Policy Forum paper this year called the “Project of the Century,” about the rapid transition to a net-zero electricity system.

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That lack of perspective helps explain why Ottawa and some provincial governments are talking past one another when it comes to new Clean Electricity Regulations, introduced by the feds last August.

For the Liberal government, it’s all about the future benefits of a clean power grid that will be felt sometime in the next decade or so; for the impacted provinces, it is about keeping the lights on at an affordable cost for voters who consider reliable power to be a birthright.

The introduction of the new regulations barely created a ripple because 82.5 per cent of Canada’s electricity generation is emission-free, mainly in provinces like Quebec (99-per-cent emission-free), Manitoba (100 per cent), British Columbia (97 per cent), Ontario (94 per cent) and Newfoundland and Labrador (97 per cent).

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But that relative calm masked the fact that three provinces and two territories operate electricity systems not blessed by hydro or nuclear power. Alberta and Saskatchewan, in particular, are reliant on fossil fuels for their generation and are larger emitters per unit of power than China or Russia.

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Both have now called for the environment minister, Steven Guilbeault, to rip up the draft regs.

Dustin Duncan, the minister responsible for Saskatchewan’s Crown corporations, including SaskPower, is set to hold a press conference Tuesday outlining his province’s opposition. Duncan said in an interview the debate is not about reducing emissions. SaskPower is already committed to retiring coal plants that currently supply a quarter of the province’s 5,437 megawatts of annual power generation and replacing them with natural gas plants that emit around half the amount of carbon dioxide.

But the federal draft regulations impose performance standards that Saskatchewan (and Alberta) believe are too stringent, in order to meet the federal target of close-to-zero emissions by 2035.

The problem, according to Duncan, is that the only alternative to coal in the short to medium term is natural gas, given that small modular nuclear reactors are likely a decade away from being commercially viable.

The province does not think that the regulations proposed by Ottawa are possible from a technological, financial or logistical perspective.

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The federal government’s financial computer modelling appears to have significantly underestimated the cost to the province and its electricity customers — the consequence, the province says, of Ottawa not asking for detailed inputs prior to publishing the draft regulations.

Duncan said the federal plan is likely to cost Saskatchewan $40 billion between now and 2035 — significantly more than the $6.7 billion in incremental capital costs that the federal government estimates for the province.

In a letter to Guilbeault, Duncan said electricity rates in his province will more than double from the average monthly bill of $199. The federal government estimate is that the new regs will only add $111 to an annual bill by 2040. Someone’s arithmetic is way off.

On the technical side, Ottawa requires a performance standard of 30 tonnes of carbon dioxide per gigawatt hour, something the province says is “excessively stringent.” The typical combined-cycle natural gas generating plant emits around 10 times that amount.

Emissions can be mitigated by carbon capture and storage (CCS), but the province says the technology has not been proven when it comes to natural gas generating plants. Vendors who manufacture CCS facilities say the government’s requirement to capture 95 per cent of emissions is technically possible. But until someone proves that at commercial scale, buyers are likely to be few and far between, even with the federal government’s 15-per-cent tax-credit incentive.

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If the new regulations are enforced, the province says it would close or severely restrict use of Saskatchewan’s 2,300 megawatts of natural gas generating capacity.

The federal government points out that any gas plant built before 2035 can operate for 20 years unabated, after which it would need to be equipped with CCS.

But such is the level of politicization that discussions to use the flexibility built into the regulations have not taken place.

At the most fundamental level, the province believes the feds are guilty of “serious overreach” in an area of provincial jurisdiction, in Duncan’s words.

In the wake of the Supreme Court’s recent decision that overturned the federal Impact Assessment Act, he may have a point. (Section 92A (1) of the Constitution Act is clear that provinces have exclusive jurisdiction over the development and management of electricity generating facilities).

“Frankly, we are asking the feds to go back to the drawing board. There are no tweaks that will help,” Duncan said in an interview. “A dictated, top-down federal policy that intrudes on our province’s constitutional jurisdiction is unhelpful and unwarranted.”

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It is not as if the province is committed to befouling its own air.

Saskatchewan says it is on course to reduce its GHG emissions by 50-per-cent below 2005 levels by 2030.

Under its existing plan, the province will increase generating capacity by 70 per cent by 2034, all but eradicating coal generation and increasing wind and solar to 39 per cent from 13 per cent now.

It has already invested in 450 megawatts of wind, solar and biomass generation in the past five years and has plans to roll out over 3,000 megawatts more by 2035. But Saskatchewan’s weather is … unreliable. As the poem goes: “Oh, how I love Saskatchewan/ When the snow’s up to your butt/ You take a breath of winter/ And your nose gets frozen shut.” For four days last January, a combination of ice fog and freezing rain meant wind generation was near zero. When the mercury dips below 32 degrees Celsius, the system stops operating.

This should have been a national action plan that, for once, was bottom up, rather than top down.

It should have tried to bring the most affected provinces onside from the start, recognizing that their decarbonization path was longer and harder than provinces blessed with abundant hydro-electricity.

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But the way it has been rolled out reinforces the idea that the West is being targeted.

No wonder the provinces most impacted are asserting their constitutional rights, particularly on a subject that is so existential to their survival as electricity prices.

Before it cut a special deal on the carbon tax on home heating with Atlantic Canada, a more politically favoured region, the Liberal government could have defended its position on a point of principle.

But now we have established it has no principles, even on climate change, we are simply haggling over the price.

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