Blake Shaffer is an associate professor of economics and public policy at the University of Calgary. Andrew Leach is a professor at the University of Alberta’s department of economics and faculty of law.
Alberta is headed for rolling blackouts, kids doing homework by candlelight, and skyrocketing electricity prices, according to the Danielle Smith government’s new “Tell the Feds” campaign against Ottawa’s proposed Clean Electricity Regulations (CER). What’s more, according to the province’s independent electric system operator, Alberta is powerless to stop the slow-moving inevitability of widespread darkness 12 years from now, despite the operator’s track record of under-forecasting clean energy growth and its mandate to maintain reliability.
It is tempting to write all this off as political grandstanding. After all, similar dire predictions were made eight years ago when policies to phase out coal by 2030 were first contemplated; now, the last of Alberta’s coal plants is set to retire seven years ahead of schedule.
The CER present a vastly different challenge. Shifting from coal to gas, despite the it-can’t-be-done rhetoric at the time, led to a significant drop in emissions, but it was also a largely incremental step. The shift toward a (nearly) net-zero grid will be far more transformative.
Just how hard it will be for Alberta to comply with the CER depends on which model you believe and how bullish you are on the pace of technological development. While some predict blackouts and spiking prices, others predict minimal cost impacts and a smooth transition to a clean energy future. The only consistent thing across the model runs is uncertainty.
Uncertainty is anathema for grid operators, however. They must plan for worst-case scenarios. Policy should reflect this, and allow sufficient flexibility to account for a range of possibilities with four changes to the CER.
First, extend the “end-of-prescribed life” for newer power plants from 20 to at least 25 years. This would allow gas plants coming online next year to run to 2049, abutting against – and testing the sincerity of – Alberta’s own goal of a net-zero economy by 2050.
Second, the current regulation allows power plants that have reached their “prescribed life” to continue to run up to 450 hours per year as “peakers” to provide power when it’s needed most. We recommend expanding this limit. The value restricts the capacity of Alberta’s system to respond to a wide range of eventualities.
Third, the regulations force existing and new industrial combined heat and power plants to meet stringent emissions restrictions. In response, facilities will likely reduce or eliminate their exports of electricity to the grid, further compromising reliable supply – and without reducing emissions. The regulations should allow existing facilities to continue their exports.
Fourth, the new regulations include a performance standard for plants equipped with carbon capture and storage that is far too stringent and aspirational. Companies will not invest in new technologies if failing to meet the lofty bar would render the facility a white elephant. Some flexibility needs to be found to avoid binary “acceptable/not acceptable” limits.
Some may think these changes will lead to a large increase in emissions, in defiance of the federal plan for a net-zero grid by 2035. But despite Ottawa’s messaging, the CER won’t actually deliver that. Under the regulations, three new gas-fired plants coming online in Alberta this year – capable of powering one-quarter of the province’s demand – will be allowed to run without emissions abatement until 2045. Despite the alleged political chasm between Edmonton and Ottawa, the difference is only five years.
Besides, flexibility means being prepared for a range of possible futures, not necessarily filling the hours with unabated emissions just because you can. That’s especially true since Canada’s $170-a-tonne carbon price for 2030 and beyond provides a huge deterrent to gas plants running too often, and a strong incentive for clean technology to undercut them. It’s likely that the CER will largely be rendered moot by carbon pricing, but if gas plants are still needed after 2035, it will be because nothing cheaper came along – and we’ll be thankful then for flexible regulations.
But while Alberta has credible concerns as to the pace and prescriptive nature of the regulations, the provincial government does itself no favours with performative bluster and policies such as the recent renewables moratorium, which serve only to drive away investment and cast doubt on the sincerity of its clean energy commitments.
Ottawa must take seriously the challenge the draft regulations place on the fossil-electricity provinces of Alberta, Saskatchewan, Nova Scotia and New Brunswick. At a minimum, the regulations need to provide more flexibility to produce a workable policy pathway to shared net-zero goals – which would only complement the carbon-pricing program that Ottawa fought so hard to implement.