While carbon taxes are getting all of the attention, here are four less covered — but important — energy issues that will come to the fore in 2024.
Clean electricity
Ottawa has committed to bringing Canada’s electricity grid to net zero carbon emissions by 2035 as it moves toward net zero for the entire economy by 2050.
Draft regulations released in August 2023 were open for public comment until November. A government-appointed Electricity Advisory Council is now reviewing submissions and will provide advice for Ottawa’s consideration as final regulations are prepared in 2024.
Ottawa’s net zero electricity pledge has been strongly criticized by premiers Danielle Smith in Alberta and Scott Moe in Saskatchewan. Both provinces’ grids are highly reliant on natural gas and coal.
Smith has called the draft regulations “overreach,” “absurd,” “unconstitutional” and “illogical.” She has warned the stability and reliability of Alberta’s energy grid could be at risk.
“The clean electricity regulations as they are currently written cannot and will not be allowed to come into effect in this province,” Nathan Neudorf, Alberta’s minister of affordability and utilities, has said.
Signaling its seriousness, Alberta has invoked the Sovereignty Act for the first time over the issue. Passed in 2022, the act is seen by the province as a tool for exerting its independence from federal interference in areas of provincial jurisdiction. Critics question its constitutionality, but it has yet to be challenged in court.
Next door in Saskatchewan, Crown Investments Corporation Minister Dustin Duncan characterized the regulations as “unaffordable, unconstitutional and technologically and logistically unattainable.”
The provinces share the view that while Ottawa’s draft plan may be feasible in other jurisdictions — such as those with abundant hydro and nuclear power — it is unacceptably punitive to theirs.
The issue is shaping up to be the next battlefield for a federal-provincial confrontation. With an October election scheduled in Saskatchewan, there will be no shortage of opportunities for animated public discussion.
Pipelines and LNG
The Trans Mountain Expansion Project was expected to be completed in the first quarter of 2024, but a recent decision from the Canadian Energy Regulator has put that timing in doubt. Trans Mountain Corporation, the Crown corporation that owns the project, is now predicting an in-service date as late as May.
Already years behind schedule and billions over budget, the company has said that each month of delay results in $200 million in additional costs.
Once complete, the project will be the first new oil pipeline to the west coast in sixty years.
Also in BC, LNG Canada’s $40-billion liquified natural gas facility in Kitimat — the largest private sector investment in Canadian history — is now more than 85 per cent complete. Startup activities are expected to begin in 2024 before first export cargoes sail in 2025.
TC Energy’s Coastal GasLink pipeline will supply the facility. It reached mechanical completion late in 2023 and is currently being readied to deliver natural gas in 2024.
While these projects move closer to — or reach — full operations in 2024, a new round of major investment decisions is expected on possible additional phases.
LNG Canada has begun studying Phase II at Kitimat, which would see capacity doubled from 14 million tons of LNG per year to 28. According to the company, discussions on the project are ongoing, including with the provincial government and Indigenous communities.
Also located on BC’s Douglas Channel, the Haisla Nation majority-owned Cedar LNG project is poised for a final investment decision in early 2024.
If either or both of LNG Canada Phase II and Cedar move to development, a Coastal GasLink expansion would also be expected.
Here too an October provincial election is looming. These projects are expected to be issues for incumbent NDP Premier David Eby, who currently enjoys a wide polling lead but has yet to articulate his energy and resource policies in detail.
“Certainly, climate remains a sleeping bear in Eby’s caucus,” said Kate Hammer, a former political advisor and current co-host of BC-focused political podcast Hotel Pacifico.
Upon assuming office in 2022, Eby stated “We cannot continue to expand fossil fuel infrastructure and hit our climate goals.” It remains to be seen whether the premier and his caucus will back additional investments in the LNG space.
“I would expect there are people advising him to avoid making these decisions before the election… because it’s going to come back to bite them eventually that these energy projects don’t seem to align with their climate goals,” Hammer said.
Adaptation
Mitigation measures such as carbon pricing and emissions caps have dominated Canadian climate change policy conversations. But they do not represent the full scope of tools available to address climate change. International conventions recognize another distinct stream: adaptation.
Adaptation measures target and protect areas that have proven vulnerable to climate change.
Bridges, roads, shorelines, buildings and ‘heat dome’-prone urban centres have all experienced costly — even deadly — impacts from storms and other events.
Adaptation is the “poor cousin” of mitigation, says Adam Fenech, an associate professor at the University of Prince Edward Island’s School of Climate Change and Adaptation. But it “has become a really huge tool that the federal government has,” he adds.
This wasn’t always the case. Not long ago, employing adaptation measures was akin to admitting climate defeat — that emissions could not be reduced.
Describing a meeting years ago involving senior Ottawa bureaucrats, Fenech said “I was present when a federal minister of the environment essentially said, ‘If you talk about climate change adaptation again, you’re fired.’ Adaptation was seen as failure.”
Fenech sees things changing. “It’s close to a crescendo now… [lack of adaptation] is creating problems for individual Canadians.”
He notes that poorly-adapted properties and buildings have become a costly issue.
The Insurance Bureau of Canada agrees. It is one of several organizations calling for more attention in the area. There appear to be plenty of areas to still address.
Ottawa’s 2023 Adaptation Action Plan lists 73 actions to be undertaken as part of its program. Over half remain categorized as ‘Funding Support Not Available.’
“Sometimes it takes regulation to make sure people are doing the right thing. But that’s what’s needed,” said Fenech.
Alternative energy
In 2022, the governments of Alberta, New Brunswick, Ontario and Saskatchewan released a plan outlining how the four provinces will partner with industry and the federal government to deliver Small Modular Reactors (SMRs) for application in nuclear power development across the country.
Focus areas include developing reactors for the electrical grid, industrial uses such as mining, and replacing diesel generation in remote and rural areas.
Governments have committed billions and set expectations that the technology will meaningfully contribute to Canada’s reductions of greenhouse gas emissions. While many of the targets for in-service deliverables remain more than a decade away, there are some important milestones coming in 2024.
A notable example is Ontario Power Generation’s expected final investment decision on the 300MW SMR at its Darlington site by the end of the year. The project has already received $970 million in federal funding. If built, it will be the first facility of its kind in Canada, a landmark for the technology’s development and a harbinger of the sector’s future.
Beyond SMRs, hydrogen projects have been proposed across the country and Canada has signed agreements with countries interested in purchasing Canadian hydrogen exports.
On the east coast alone, companies such as World Energy GH2 in Newfoundland and Labrador and EverWind Fuels in Nova Scotia are ambitiously targeting exports in 2025.
Together, these issues will make the coming calendar year critical for shaping Canada’s energy future.
Excellent article that neatly covered the current Canadian energy issues, including the current and future political and infrastructure challenges. P. Jost, MBA