Opinion: New draft electricity framework: Clean and green or ugly scene?

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By Gary Mar

On Feb. 16, the federal government released a new draft framework for its proposed Clean Electricity Regulations. This is the third iteration. Did the government finally get it right?

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It certainly seems as though they listened to many of the concerns brought forward by people in the electricity sector. The document acknowledges that previous versions of the CER raised problems in terms of reliability and the ability to respond to emergencies. It also acknowledges the chill that would be put on electricity development due to uncertainty and unpredictability.

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There are a number of changes in the new CER framework to try to address these concerns. For example, instead of requiring a power plant to shut down unless it always meets a performance standard, the new framework proposes an emissions limit that would apply across a full year of operations. Utilities can pool the limits across different facilities to enable more operational discretion. And if a facility exceeds its limit — for example, because critical equipment has failed — it could purchase offset credits to make up the difference.

This additional flexibility is certainly an improvement. It has the potential to ameliorate many of the problems with reliability and could provide electricity suppliers with the certainty they need to go forward. But to quote Michael Powell, vice-president for government relations with Electricity Canada, “the devil is in the details.”

The new framework also suggests changes to ensure electricity produced from cogeneration of heat by industrial facilities — which comprises about 40 per cent of the electricity produced in Alberta — isn’t penalized in a way that results in operators merely shutting off supply to the grid. Again, the right problem and probably the right direction in terms of a solution.

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But the biggest problems that the new CER faces aren’t in the regulations themselves. They are more like supra-regulation problems.

The first is the question of whether the CER is even needed. The Alberta Electricity System Operator (AESO) released projections for the province’s future GHG emissions from the electricity sector, both with and without the CER (in its previous iteration). The two scenarios are surprisingly similar. Alberta’s emissions from electricity peaked in 2005 at 51.9 megatonnes. In 2021 (the latest year for which measured emissions are available), emissions were 28.4 megatonnes. In 2024 they are likely to be around 12.5. And this drop is projected to continue, rapidly and substantially.

By 2035, the AESO projects that electricity emissions will be just 2.0 megatonnes, a decrease of about 96 per cent from its high point. That’s without the CER in place (but with carbon pricing and incentives — both separate from the CER). With the CER, emissions for that year will be 1.1 megatonnes. That’s not much of a difference. One megatonne is the equivalent of the yearly GHG emissions of 152 cows.

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These models are likely to be updated and the numbers for both scenarios will likely change. But the relevant question is: is 152 cows’ worth of emissions a big enough difference to be worth enacting complicated and exacting legislation? The answer is far from settled.

The second question has to do with the constitutionality of the scheme. Even if the CER were to be rolled out in a way that satisfies the concerns raised by every stakeholder, it might not matter. Provincial governments in Alberta and Saskatchewan, among others, have raised the question of whether it is constitutionally valid to have federal legislation that interferes in the management of electricity within a province.

Provinces have argued that limiting emissions is not a sufficient reason to supersede their constitutional right to regulate power generation.

It is very likely that no matter what it looks like, the CER will wind up in court.

Gary Mar is president and CEO of the Canada West Foundation.

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