By: Glenn Wright, Chad Eggerman, and Janelle Anderson
The federal government has committed to doing its part to reduce emissions of greenhouse gases (“GHGs”), the major contributor to climate change. After nearly two years of development and consultation, the federal government finalized the Clean Electricity Regulations (the “CERs”) in December 2024. These regulations are an important part of the federal government’s plan to reduce greenhouse gas emissions (“GHGs”), the major contributor to climate change. The purpose of the CERs is to establish a regime that prohibits excessive carbon dioxide (CO2) emissions from the use of fossil fuels to generate electricity.
Energy is the backbone of our economy and society. For many decades human society has delayed action on climate, but there is a growing recognition that to address the climate crisis we must ultimately replace fossil energy with clean energy. The world is now amid a rapid, and accelerating, energy transition toward the new electric age. Canada is committed to decarbonizing our existing electricity grids while rapidly expanding capacity with clean electricity to meet growing demand. The CERs serve to provide clarity on critical electricity policy rules and align all relevant authorities to the net-zero goal of 2050 for the electricity sector. This article aims to provide an overview and analysis focused on Saskatchewan by addressing the following questions:
What do these regulations mean to Saskatchewan’s grid?
Will our electricity remain affordable?
Will a decarbonized grid be reliable?
Are these regulations and timelines realistic?
The CERs and Saskatchewan
Provinces have jurisdiction over electricity planning and operations within their borders. However, the federal government does regulate nuclear energy, international transmission lines, and has jurisdiction over matters of national concern. The federal and provincial governments have shared jurisdiction over the environment. The federal government has enacted the CERs under the authority of the Canada Environmental Protection Act, 1999.
Despite extensive consultation and the many accommodations made in the CERs to provide flexibility, Alberta has indicated it intends to challenge the CERs in court and Saskatchewan is contemplating joining Alberta’s efforts. The opposition of Alberta and Saskatchewan is narrowly focused on federal intrusion of provincial exclusive jurisdiction over electricity and other natural resources without regard for the broader shared jurisdiction over the environment.
The federal government began consultation on the development of the CERs in March 2022. Saskatchewan has been wary of the proposed CERs and the political maneuvering on energy, pollution pricing, and climate action has politicized these matters in Saskatchewan over the past few years. For example, Saskatchewan proclaimed The Saskatchewan First Act and established the Economic Impact Assessment Tribunal (“EIAT”) to drive a narrative of opposition to the CERs and perceived federal “meddling” in affairs of provincial jurisdiction. The EIAT released its report ahead of the revised CERs, meaning that much of the Tribunal’s analysis may not be relevant and will require re-examination. The final CERs now include a suite of compliance flexibility measures, without prescribing specific technologies, and will ensure a net-zero electricity system by 2050 instead of 2035 (as originally proposed). The goal to achieve net-zero electricity by 2050 now aligns with Saskatchewan’s previously announced net-zero objective for SaskPower.
The CERs will begin limiting emissions from electricity generation starting in 2035 and achieve a net-zero grid by 2050. The CERs will apply to generation connected to any system subject to the North American Electric Reliability Corporation (“NERC”) standards greater than 25MW capacity burning any amount of fossil fuel. This means that the CERs do not apply to small generators not connected to the grid (generally units located in the far north). The CERs establish an annual emissions limit (“AEL”) for each electricity unit based on emissions intensity. For 2035-2049, the applicable emissions intensity is 65t/GWh and 0t/GWh for 2050 and beyond. The AEL also allows significant compliance flexibility in the years 2035-2049 through pooling (or trading) of emissions among units, banking emissions credits to future years, and buying offsets. In addition, there are exceptions for emergency circumstances to ensure that a provincial regulator can immediately declare an emergency without federal approval, thereby ensuring system reliability can be maintained.
With respect to offsets, SaskPower could procure an additional 35 t/GWh in 2035-2049 and 42 t/GWh in 2050 and beyond if necessary to exceed the annual emissions limit. In other words, the intended upper limit for the 2035-2049 period is 100t/GWh (65t/GWh AEL + 35 t/GWh maximum permissible offsets). All other compliance flexibility measures (pooling and banking) end in 2050. At present, only Canadian offset credits will still be permissible in 2050 and thereafter. There is currently no mention of internationally transferred mitigation outcomes for flexibility compliance within the CERs.
With respect to the timing of the AEL application for each unit, the CERs include a gradual transition for existing and under construction units essentially providing 25 years of operation in most cases from commissioning before the AEL would apply. For Saskatchewan, some examples are provided below in Table 1.
Table 1: Timing of AEL application to selected units in Saskatchewan
| Name of Plant | Year Commissioned | Type of Plant (per CERs) | Date AEL applies |
| North Battleford (Northland Power) | 2013 | Existing | January 1, 2039 |
| Chinook (Swift Current) | 2019 | Existing | January 1, 2045 |
| Great Plains (Moose Jaw) | 2024 | Existing | January 1, 2050 |
| Aspen (Lanigan) | Projected 2027 | Planned | January 1, 2050 |
The CERs also contemplate new units, which is any plant commissioned after January 1, 2025, that was not already planned or under construction by December 31, 2027. All new units will be subject to the AEL beginning on January 1, 2035. In practical terms, this means that all new fossil fuel units will require some form of emissions abatement, such as Carbon Capture and Storage (“CCS”) or Carbon Capture Usage and Storage (“CCUS”) to meet the AEL.
For all coal fired generation, the AEL will start to apply on January 1, 2035. This means that all unabated coal fired generation would need to be shuttered by that time or retrofitted with CCS or CCUS along with fuel switching to biomass. It is doubtful that CCS or CCUS on coal would deliver emissions intensity below the 2035-2049 AEL of 65t/GWh, so investment into the expansion of “clean coal” in Saskatchewan appears to be precluded by the CERs. Without a marked improvement in CCS/CCUS capture efficacy and operating availability, coal units with CCS/CCUS almost certainly could not comply with the AEL of 2050 and beyond (0t/GWh). For reference, unit #3 at the Boundary Dam power station just passed the 10th anniversary since operation with CCUS began in fall of 2014, and the latest update from SaskPower disclosed an emissions intensity of 316t/GWh, which far exceeds the AEL that will apply on January 1, 2035.
The intent of the CERs is to decarbonize electricity. In order to comply, Saskatchewan may have to abandon its coal to gas transition and instead ramp up deployment of non-emitting generation. SaskPower has already released many different scenarios to achieve net-zero emissions by 2050 and has committed to achieve net-zero GHG emissions by 2050 or earlier (as disclosed in its 2023-2024 annual report). The short-term forecast for generation shown on page 14 of SaskPower’s annual report (Figure 1 below) suggests a substantial expansion of wind and solar energy in the province over the next 5 years. This suggests that SaskPower’s plans are already aligned with the CERs. Ultimately, the CERs really mean that the rush to build new unabated gas generation is at an end.
Figure 1: SaskPower’s forecasted 2028-2029 Generation Capacity
Will our electricity remain affordable?
Canadians are facing an affordability crisis, and the cost of electricity is top of mind for residents and businesses alike. The federal government conducted extensive cost analysis and modelling to project the impact of the CERs. The federal government shared its modelling assumptions and results with technical experts from provincial and territorial governments, academia, utilities, ENGOs, and electricity system operators, and other third parties to help validate and improve the precision of the CERs’ projected impacts. Most of Canada is projected to see the price of electricity fall by between 5 – 12% by 2035-2050 due to the CERs. Saskatchewan is the lone outlier that is projected to see real residential price increases of 1% (approximately 0.2 cents per kWh between 2035-2050 compared to the reference case with no CERs).
No doubt, there is heavy lifting to do in Saskatchewan to decarbonize our grid. The federal government has committed to helping provinces transition to clean electricity. The latest Fall Economic Statement finalized the criteria for the clean electricity investment tax credits. These tax credits are part of more than $60 billion CAD in federal support scheduled over the next decade to support the electricity sector. Although the cost analysis modelling for the CERs projects a modest increase in electricity rates for Saskatchewan, the capital costs to realize the transition are being spread across the national tax base, meaning Saskatchewan stands to benefit from federal funding to meet the growing demand for clean electricity.
Will a decarbonized grid be reliable?
One of the principles of the clean electricity strategy is to ensure electricity remains reliable and affordable. The CERs envision a clean, reliable, and affordable electrical grid, but how will that be maintained throughout the transition?
Reliability is intended to be maintained throughout the transition to clean electricity via three avenues: (1) the CER emergency exemptions; (2) expanding interjurisdictional interties; and (3) adopting advancing technology. The CERs permit a provincial regulator to direct a unit to operate under emergency circumstances for up to 30 days and emissions associated with the emergency generation may be deducted from reporting if certain conditions are met. Emergency deduction periods can be extended by an application to the federal Minister responsible for the CERs.
Along with the finalized CERs, the federal government also issued its policy strategy for clean electricity in December 2024: Powering Canada’s Future: A Clean Electricity Strategy. The Clean Electricity Strategy recognizes the importance of interjurisdictional interties to promote both the development of renewable energy and to enhance reliability. A discussion paper on interjurisdictional interties is expected to be released for comment later this year. The Clean Electricity Strategy also recognizes the importance of technology, much of which will help improve the reliability of the grid. The Canada Infrastructure Bank (“CIB”) was established in 2017 with a mandate to invest in revenue-generating infrastructure projects that are in the public interest. This includes $10 billion CAD earmarked for zero-emitting power generation (including nuclear), energy storage, and transmission (including interties), as well as at least another $10 billion CAD in green infrastructure, including energy efficient building retrofits; water; wastewater; carbon capture, utilization and storage; clean fuels; hydrogen; and zero emission vehicle charging and refueling. Presumably demand side management technology will also play a role in supporting reliability: for example, many smart-grid enabled machines may be controllable directly by the electric system operator to automatically shed load or respond to load demand as a form of decentralized storage, improving the reliability of intermittent renewable energy.
In summary, the CERs and the Clean Electricity Strategy recognize the importance of system reliability and have been designed to deliver a decarbonized grid that is both reliable and affordable.
Are these regulations and timelines realistic?
Clean electricity is a prerequisite for meaningful climate action. The federal government’s ambition to achieve a net-zero grid has been delayed from 2035 to 2050 in response to the CER public consultation process. Without the CERs, the Canadian grid is highly unlikely to become decarbonized by 2050, and GHG emissions from the electricity sector are otherwise projected to increase by 2050.
Comprehensive modelling suggests that the clean electricity transition is cost effective and achievable. The compliance flexibility built into the CERs helps to defray the cost of implementation. Given increasing demand for electricity, irrespective of the CERs, provinces like Saskatchewan will need to invest in expanding electricity grids. The CERs appear to ensure the build out is clean while minimizing incremental costs. Provided provinces act in good faith to collaborate and begin the transition in earnest, the CER timelines seem to be both realistic and achievable.
Summary
The intent of the CERs is to take a long-term perspective and commit to affordability and reliability. Electricity generation infrastructure often operates for decades. It would seem a prudent use of public dollars to build infrastructure today that aligns with a net-zero grid by 2050, which appears to be the goal of the CERs.
The CERs provide both policy clarity now and into the future. While the goal is a net-zero grid by 2050, clearly the CERs intend to quicken the pace in terms of deploying clean energy. The federal government has also stepped up with $60 Billion CAD in funding to support the transition. This approach is ambitious, but seems achievable — provided all levels of government cooperate and recognize that this energy transition represents an opportunity to chart the best possible future path for Canada’s electricity systems to provide affordable and reliable electricity to Canadians for generations to come. On the other hand, if the polarization of clean electricity escalates and jurisdictional challenges play out in the courts, the regulatory uncertainty will undermine the ability for Canada to achieve net-zero by 2050. If that happens, the world around us may just leave Canada behind while we argue among ourselves over jurisdiction.
Disclaimer
This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice. Contact Procido LLP (www.procido.com) if you require legal advice on the topics discussed in this article.