The regulatory quandary

An effective investment and regulatory environment will be needed for Canada to move to a more resilient, low-carbon economy. The Conference Board of Canada has estimated that to increase capacity of the grid to the levels recommended by the government would cost as much as $1.7 trillion by 2050.

The problem is that much of Canada’s electricity regulations were devised in the middle of the 20th century, when terms like “climate change” and “net-zero emissions” didn’t exist. It is often difficult for modern utilities to invest in innovative technologies such as battery storage and smart grids because the need for such spending wasn’t conceived of when the current rate regulatory system was created 60-70 years ago.

There are other huge complications when it comes to electricity regulation in Canada:

• Canada gives responsibility of natural resource management to the ten provincial and three territorial governments.

• Each province tends to do their own thing, and has their own individual approach to electricity policy, ownership, industry structures, and generation technologies.

• This has also resulted in each province having its own economic regulatory system. In many cases, federal and provincial priorities on energy are not aligned, complicating policy development.

At the federal level alone, the electricity industry is affected by over 90 different regulations that are either in force or pending. These stretch across 31 different statutes, covering issues as diverse as greenhouse gas emissions, species at risk, migratory birds, navigation protection and more. The Impact Assessment Act and the Fisheries Act , both amended in 2019, have added to this growing level of regulation in Canada.

The electricity sector is also often hampered by Canada’s cumbersome infrastructure permitting processes. Last fall, a wind-to-hydrogen project was announced in Newfoundland and Labrador. This will take only two years to build… and yet it will take 8-10 years to permit.

A hydroelectric plant can take 25 years to plan, get approved, and construct.

Transmission lines — the big powerlines that move electricity long distances — are hugely complicated to survey and then build. Even making sure the electricity infrastructure on your street is ready for the increased load will take years of investment. Unsurprisingly, the World Bank recently ranked Canada 64th in the world for ease and speed of obtaining construction permits.

What needs to be done

Create a Canadian electricity strategy. There is a lot to be done that needs coordination between Federal and Provincial governments, not to mention local and Indigenous governments. Canada needs a cross-government strategy to coordinate these efforts, pool resources, coordinate funding and work with the electricity sector to implement the planning and building process.

Regulate for outcomes, not process. Right now, a series of regulations hinder our ability to achieve our net zero targets. During the COVID-19 pandemic, governments and industry worked together to facilitate vaccine development and deployment and we succeeded. We need the same level of determination and commitment from all levels of government. Governments need to work to speed up development, not slow it down.

Build things faster.

If Canada does not find ways to allow new electricity infrastructure to be built faster, Canada will fail to meet our 2035 and 2050 climate goals. This year, 2023, Electricity Canada will release a report on behalf of the electricity sector that will propose innovative solutions to allow for electricity infrastructure to be permitted and approved faster.

Meeting the timelines set by the government requires both significant investment and efficient and effective regulatory and permitting systems in Canada. These investments are crucial for growing Canada’s economy and reducing our carbon footprint. They create good jobs, promote clean economic growth, and ensure that businesses and households can continue to benefit from access to affordable, sustainable, and reliable energy. Addressing the regulatory barriers and the investment required will pay dividends in the future.