The Canadian government published its proposed Frame for the Clean Electricity Regulations (CER), a follow-up to a discussion paper published in March.
Known as the Clean Electricity Standard, the rule making process is intended to arrive at a clear basis for provinces and territories to plan and operate their electricity grids, while also delivering reliable and affordable electricity to Canadians.
The regulations are being developed around three core principles:
• Maximising greenhouse gas reductions to achieve net-zero emissions from the electricity grid by 2035;
• Ensuring electricity grid reliability to support a strong economy and guarantee Canadians’ safety by having access to secure energy that supports their cooling needs in the summer and warmth in the winter; and
• Maintaining electricity affordability for homeowners and businesses.
The CER is intended to help provide long-term regulatory certainty while also encouraging the increased deployment of non-emitting electricity options such as wind, solar and small modular reactors. It also aims to encourage the use of interties from provinces and territories with an abundance of hydroelectric power; incentivise increased use of hydrogen, battery storage and carbon capture and storage; and help to set the stage for the increased use of demand-side management and distributed energy in Canada.
The CER would regulate carbon dioxide emissions from electricity generating units that meet all of the following criteria: Combust any amount of fossil fuel for the purpose of generating electricity; have a capacity above a small megawatt threshold (value to be determined); and offer electricity for sale onto a regulated electricity system.
The CER would establish an emissions performance standard having an “intensity form” (expressed in tons per gigawatthour) set at a “stringent, near-zero value” in line with direct emissions from was described as “well-performing, low-emitting generation” resources such as geothermal or combined cycle natural gas with carbon capture and sequestration.
A regulated unit would be barred from operating when its quantified emissions performance exceeded the applicable standard over a period of time that has yet to be determined. Any residual emissions below the standard would be subject to financial compliance requirements, such as offset purchases.
According to the proposed rules, compliance may be achieved through a variety of technologies and the regulations are intended to be technology-neutral.
A phase-in of the requirements would allow newer natural gas units that were built prior to the CER publication date to operate past 2035 for a period of time that has yet to be determined. Unabated natural gas use also would be allowed during emergency circumstances.
In addition, existing generating units that have reached their end of prescribed life could continue to generate electricity to provide backup to variable renewable electricity if they emit less than a certain amount of kilotons per year and operate for fewer than a certain number of hours per year. Both values remain to be determined.
While the CER limits is expected to become binding in 2035, it likely would deter any new unabated fossil fuel-fired generation in Canada. In particular, any decision to commission a new unit after 2025 would need to take into consideration the CER obligations. And, because continued operation after 2035 would require abatement technology, units would need to resolve the financial implications of CER compliance as part of their project development process.
The government said its proposed regulatory frame was informed by more than 160 written submissions and discussions with parties during open meetings earlier this year.