Energy and Natural Resources Minister Jonathan Wilkinson Releases Federal Electricity Vision Paper: Powering Canada Forward
Today, Canada’s Minister of Energy and Natural Resources, Jonathan Wilkinson, announced Powering Canada Forward, which outlines Canada’s vision in support of a net zero electricity grid nationwide by 2035 (NZ2035). The paper recognizes NZ2035 as a federal priority in the climate space and an important enabling step to unlocking a net zero economy by 2050.
The document is intended to serve as a pre-cursor to the release of the Clean Electricity Regulations and asserts the Government of Canada’s intent in working with provinces and making strategic investments to achieve the desired outcomes.
The vision outlines key areas of work for the Government of Canada while recognizing that electricity is a provincial jurisdiction. The paper is expected to be followed by the release of the new Clean Electricity Regulations as early as this week. Furthermore, the vision paper announces that Canada’s first Clean Electricity Strategy, will be released in 2024, and its development is being supported by the Canada Electricity Advisory Body.
Announcement Details
In the Powering Canada Forward announcement, as expected, Minister Wilkinson acknowledged the challenges and economic opportunities associated with achieving NZ2035, likening the situation to the railroad building of the 19th century. He emphasized the transition will be more difficult for some jurisdictions than others, but that the federal government will do its part in supporting the provinces.
The document outlines the role of the federal government in the electricity space as establishing environmental regulations, regulating nuclear power, making strategic investments and facilitating collaboration amongst provinces and territories. The vision document also indicates that the 2024 Clean Electricity Strategy will lay out the integrated package of policies, tools and actions that Ottawa plans to use to support NZ2035.
The document notes that Finance Canada will be consulting on the Clean Electricity Investment Tax Credit. Furthermore, Natural Resources Canada is open for feedback on the design of the Smart Renewable Electrification Pathways Program, and that it will be seeking views on how the federal government can best support intra-provincial transmission lines.
Notably, the document referenced the two requirements for the Clean Electricity Investment Tax Credit of “demonstrating a commitment to use federal funding to lower electricity bills for households and businesses, and a commitment to achieve a net-zero electricity sector”, and notes these requirements could potentially be extended to other federal funding mechanisms.
Perhaps the biggest takeaway from the vision document is the federal government explicitly making the case that while electrification will result in increased electricity bills, overall energy costs to consumers will be decreasing, as seen below:
What Comes Next
Environment and Climate Change Canada is due to release Draft 1 of the Clean Electricity Regulations very shortly, followed by a 75-day consultation period, as noted in the electricity vision.
In addition, the Department of Natural Resources will work on the design of the new Smart Renewable and Electrification Pathways Program, having received a $3 billion top-up in Budget 2023. Departmental officials are working on the design of this mechanism and are open to comments from stakeholders over the fall, with a new funding round coming in spring 2024 at the earliest.
The Government of Canada has released draft legislation for the Carbon Capture Utilization and Storage, and Clean Technology ITCs, as well as for labour requirements for these two. Comments are due by September 8th. These two ITCs are expected to be included in the second budget implementation act, which is expected to pass Parliament by the end of the December 2023 session.
It is expected that draft legislation for the Clean Hydrogen ITC will be released in the Fall of 2023, with a consultation on the Clean Electricity ITC expected later this year.
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