Election 2021: Canada needs a national electricity system

A couple of elections from now, plenty of Canadians are going to be driving electric cars and trucks, heating and cooling their homes with electric heat pumps, and working in industries powered by electricity. Consequently, a robust power grid will be the foundation for Canada’s prosperity. But experts say the current grid may not be up to the task. Given what’s at stake, why doesn’t the future of the country’s electricity system figure more prominently in the election campaign? 

Like other advanced economies, Canada has begun the shift from fossil fuels (coal, oil, gas) to electricity supplemented by low-carbon fuels like hydrogen and by 2050 that process will be well advanced. Economist Chris Bataille of Paris-based Institute for Sustainable Development and International Relations estimates Canada will need two or times as much electricity in 30 years. 

This will be require rapid and profound change to the way Canada generates, transports, and distributes electricity.

The United States gets it. The future of its national electricity grid is being intensely debated, in part because emerging industries like electric vehicles and batteries are considered critical to economic security. The Americans worry China already has a big lead, with President Joe Biden committed to putting the US back in the driver’s seat by 2030. And he is spending hundreds of billions to ensure the American electricity system is ready. 

Canadians not talking about electricity

In Canada, electricity barely registers on the public’s radar. The country’s electricity system is already 80 per cent no or low-emitting generation (led by hydro at 60%, followed by nuclear), one of the highest clean electricity rates in the world. Prices are low and provincial systems are reliable. If that occasionally changes, as it did over the past decade in Ontario when poor provincial policy led to rising consumer power prices, the public becomes engaged, but interest eventually dissipates once the specific problem is addressed. 

“For some reason we’re just not having the conversation here,” Dr. Bruce Lourie, president of the Ivey Foundation and adjunct professor at Queen’s University, said in an interview. He blames federal politicians afraid to ruffle provincial feathers and premiers more interested in protecting their constitutional turf than engaging in constructive conversations.

“We’ve got to have an adult conversation about the future of a strong, competitive electricity market,” he argues.

A big impediment to that conversation is jurisdiction: energy is a provincial responsibility. Regulators are provincial. Except for Alberta and Ontario, provincial government-owned utilities are mostly responsible for power. Electricity trade is mostly north-south with US states rather than east-west with other provinces.

No wonder the Canadian electricity sector looks like 10 provincial and three territorial fiefdoms. 

Despite the challenges, there is a possible path forward, though it has three tracks. Economists Mark Jaccard and Bradford Griffin argue that two federal laws give Ottawa the authority to decarbonize electricity. Lourie suggests adding regional planning councils (we’ll consider an American example). And Canada actually needs two adult conversations about electricity, one between the federal and provincial political leaders and the other between Canadians. 

The path to zero-emission electricity

In their recent paper, “A Zero Emission Canadian Electricity System by 2035,” Jaccard and Griffin argue that doubling generation capacity while completely decarbonizing within 29 years is a daunting challenge. Too often, the conversation is dominated by advocates of a particular technology. Renewables (wind, solar, batteries) vs. hydroelectric vs. nuclear vs. natural gas, and so on. Instead, two federal rules fully implemented will enable provinces to pick the clean electricity technologies best suited to achieving decarbonization while doubling or tripling consumption.

The Canadian Environmental Protection Act sets maximum emission limits of CO2 per kilowatt-hour (kWh) for electricity generation plants. By 2030, the latest rules will close most plants fueled by coal, though not those fueled by natural gas. Second, the Greenhouse Gas Pollution Pricing Act, declared to be constitutional by a 2020 decision of the Supreme Court of Canada, 

“…we propose that the federal government adjust the stringencies of these two policies to ensure that electricity generation in every Canadian province is net-zero by 2035 at the latest, and remains that way as the system grows to 2050,” write Jaccard and Griffin. 

If provincial governments agree to take this approach, Ottawa can enter into “equivalency agreements.” If they aren’t interested, the federal government can impose its “backstop” programs. Either way, constitutionally valid standards are used to prompt change in the provincial electricity system.

But this approach won’t solve all of the problems. The two economists provide a laundry list of other issues that includes “cost effective energy efficiency and load shifting, innovation and adoption in energy storage, reconciliation with Indigenous Peoples, and special challenges of zero-emission electricity in remote and northern communities.”

Should Canada follow the lead of other decentralized federations and adopt regional planning of the national electricity system?

The path to regional planning

“If you look at the US, Europe, Australia, there are regional bodies that coordinate electricity planning, transmission planning, [develop] new rules around the free trade of electricity, all of that,” he said. We need to “talk about an east grid and a west grid. We’re not going to connect the entire country, but we need to connect to the country where it makes economic sense.”

An example of American regional planning is the Northwest Power and Conservation Council, created in 1980 by federal legislation. Idaho, Montana, Oregon, and Washington are members. The Council creates a regional power plan, but the states are responsible for setting their own goals and regulations, director of power planning Ben Kujala told Energi Media.

If this model were used in Canada, as Lourie suggests, regional planning bodies could be established for the West (BC, Alberta, Saskatchewan, Manitoba), the East (Ontario, Quebec), and the Maritimes (Newfoundland and Labrador, New Brunswick, Nova Scotia, PEI). 

Philip Dugauy of Canada Grid, a new advocacy group that is part of The Transition Accelerator, which is funded by Lourie’s foundation, says FERC (US Federal Energy Regulatory Commission) is overhauling the American inter-regional electricity planning process. 

“Canadians should have a role in that and we should be communicating with our American neighbors as they push for more market integration amongst American states”, he said.

The path to electricity conversations

Addressing those thorny problems will require a national forum in which to have a public conversation about them. This is easier said than done. The electricity system is littered with “gatekeepers” who prefer to keep the conversation behind closed doors, including publicly-owned utilities and politicians who defer to them.

Far better to bring that conversation out into the sunlight. Lourie thinks the Pan-Canadian Framework on Clean Growth and Climate Change – the federal plan developed with the provinces in consultation with indigenous peoples – can provide a model for government discussions. 

Even though Canada already has much of the necessary federal legislation, and assuming it could create a forum for policymakers to cooperate and regional organizations to plan and coordinate provincial electricity, there is one piece still missing from the puzzle: political will.

Premiers have shown little interest in fostering growth of east-west electricity planning and trade. Prime ministers tiptoe very carefully around the junior governments for fear of stepping on jurisdictional toes and provoking a political backlash. They are limited to funding more provincial transmission inter-ties, for example, but the provinces still have to take the initiative.

Getting around that political standoff requires public support for change, which is why Duguay’s group was created. “We’re building a coalition of industry,  developers, technology manufacturers, engineering service companies, labour, and civil society,” he said. “What unites these groups is a common vision for grid integration.”

Changing the politics around a national electricity system means changing the public conversation around energy. More often than not, news headlines and watercooler chatter are dominated by Alberta’s perpetual outrage at Ottawa’s alleged “dismantling” of the oil and gas economy, which sucks the oxygen out of the room and stifles discussion about the energy transition and the growing importance of electricity issues.

What do the election platforms say?

The Liberals launched their climate plan Sunday and it calls for a Pan-Canadian Grid Council, in partnership with the provinces and territories, that will “establish national standards, best practices, and incentives to promote infrastructure investments, smart grids, grid integration, and electricity sector innovation…” The party is also promoting higher electricity exports to the United States. 

The announcement included a commitment to Canadian grid reform: “A key challenge is Canada does not have a national power grid. And various regional grids do not all connect, limiting the reach of our clean power sources. Just as Canadian governments invested in the national railway and national highways, we can work with our provincial and territorial partners to support the development of a national power grid that will secure affordable and net-zero power for all Canadians and create thousands of good-paying jobs.”

The CPC (pages 81-82) are proposing a National Clean Energy Strategy to “build a cleaner, more resilient grid that is adaptable to regional conditions and priorities. This will include strategies for developing and expanding smart grids, improving interties, increasing the use of mass storage, and developing and deploying new clean energy technology such as nuclear, hydrogen and renewables.”

The NDP (page 50) propose creating a Canadian Climate Bank that “boost investment in renewable energy, energy efficiency and low carbon technology” and “provide support for interested provinces to inter-connect power grids and introduce smart grid technology…”

The Green Party has not yet released its election platform.

Baby steps

The promise to create a national grid vaults the Liberals ahead of the CPC, NDP, and Greens on the issue of electricity system reform. The other parties are headed in the right direction, but will they respond to the Liberal challenge?

Lourie thinks the key ingredient to making national electricity system reforms work is political will. Can the next prime minister build a coalition of provinces and stakeholders that is able to put the puck into the net?

“It can’t be the federal government telling everyone to do this. We need the provinces to understand the benefits,” he said. “It’s a no-brainer, but they have to be in the room together working on this, not fighting about it in the media.”

How are committed are the party leaders to making their proposals a reality? That is a question that can be asked on the campaign trail. Canadians will watch with interest to see if Trudeau, O’Toole, and Singh provide an answer.

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