On September 20, 2021, Canadians re-elected Justin Trudeau as Prime Minister, maintaining a virtually identical minority Liberal government that has been in place since November 2019. The Conservative party remains the official opposition party, with the potential balance of power resting with the New Democratic Party (NDP), the Green Party, and the Bloc Quebecois (BQ).
This was an early election called two years into the Liberals’ maximum four-year mandate. Some said it was a referendum on how the Covid-19 pandemic has been handled in Canada to date, as well as the plan for post-pandemic recovery. However, the results also imply at least a similar level of support towards Canada’s energy policy, one key tenet being the increase in carbon pricing in Canada to at least $170CDN/tonne by 2030.
The Trudeau government is likely to quickly lock in the planned increase from $50 per tonne next year to $170 in 2030 through $15 annual increments. That higher levy will drive up the cost of gasoline, heating fuels, and electricity fired by fossil fuel for Canadian consumers and businesses. An increase in the federal carbon tax would be a significant windfall for renewable developers, as they can sell their valuable carbon offsets at a higher price.
The Liberal Party also promised to set interim targets for greenhouse gas (GHG) reductions in the Canadian oil and gas industry for 2025 and 2030, consistent with a path to a net-zero Canada by 2050. This will be a challenge as they look to balance interests from an industry that employs 500,000 workers and contributes billions to government revenues, against industry critics that would strongly oppose any further subsidies for oil and gas producers–even if they help reduce emissions from production.
The Liberal pledge to introduce a Clean Electricity Standard to set Canada on a path to cut more emissions by 2030 and achieve a 100 percent net-zero emitting electricity system by 2035 is also ambitious, and could conflict with plans in some provinces to use natural gas as a replacement for coal or to back up intermittent renewable sources like solar and wind. It may also tighten the voluntary renewable buyers’ market that is currently taking off in Alberta as electric utilities seek new renewable projects to comply with a Clean Electricity Standard.
Corporate demand is now among the biggest drivers of new wind and solar energy development in Canada, according to Business Renewables Centre (BRC) Canada’s Deal Tracker, with 2021 a record year for new corporate renewable energy procurement. Agreements announced to date have a total cumulative capacity of 684 MW. More than a third of these deals have been announced this year alone, pushing new investment in Alberta past $1 billion CDN.
Finally, significant commitments to zero-emissions buildings and vehicles are also key components of Canada’s plan to reach net-zero by 2050. Five-year emission reduction targets and plans to achieve them are now legislated through the Canadian Net-Zero Emissions Accountability Act, with the first target being set for 2030.
Further, the Act establishes the Net-Zero Advisory Body and also requires an emissions reduction plan, a progress report, and an assessment report for each target period that is to be tabled in Parliament and made available to the public. To achieve net-zero emissions by 2050, the Government of Canada will launch a voluntary Net-Zero Challenge for Canadian companies later this year. Companies looking to participate can contact Edison Energy to discuss the development of a net-zero strategy.
While most agree that legislating milestones towards net zero is a big step forward for Canada, Trudeau’s new government has its work cut out for it as it looks to accelerate climate action-related policy, regulation, and programs that have been in place or under development for several years, and to take new election platforms and promises forward into meaningful and executable policies and plans.
The impact of these climate commitments on businesses across Canada cannot be overstated, and Edison Energy is here to help in these fast-evolving markets. We provide large corporate, industrial and institutional clients with assistance in understanding and navigating the choices and risks of managing energy.
Please connect with us to review the specialized suite of services we offer across sustainability, renewables, conventional supply and demand. Edison works with our clients to address the biggest challenges in energy today: cost, carbon and complex choices.
About the authors:
As Vice President of Energy Services in Canada for Edison Energy, Mike Parkes oversees Edison’s Canadian energy consulting business across energy commodity procurement, utility bill payment and reporting services, and energy efficiency projects.
As Head of Policy for Edison Energy, Shannon Weigel tracks regulatory, legislative and administrative proceedings globally, using this information to help clients make better energy procurement decisions.