Canada’s provincial and territorial governments are in the mood to work together.
Earlier this month, they finalized the Canadian Free Trade Agreement (CFTA) in a positive step toward liberalizing trade within Canada. The agreement seeks to create equal opportunity for Canadians by breaking down barriers to trade, investment and labour mobility within the country. Unlike previous agreements to improve internal trade, the CFTA takes a “negative list” approach, which means that all goods and services are included in the agreement unless explicitly excluded. There are quite a few exceptions – they take up more than 100 pages of the agreement text (pdf) – but the agreement provides a strong framework for improving economic relationships between provinces and territories.
It’s good that governments within Canada are increasingly working together. However, when it comes to tackling the challenges of climate change, provinces are still looking inward for answers when the scale of the problem requires looking at all solutions.
In the CTFA’s long list of exceptions, one item keeps popping up over and over – electricity. As provinces design policy to reduce their carbon emissions, they should be looking to each other for help – including creating more opportunities for clean energy to flow between provinces.
Here in the West, we have been gifted with abundant and diverse energy resources, but they’re not spread evenly across the region. British Columbia and Manitoba have relied on hydroelectricity to power their grids while Alberta and Saskatchewan have traditionally turned towards fossil fuels.
Now that provinces are taking serious steps to combat climate change, they’ve become a lot pickier about the type of electricity they consume – especially Alberta and Saskatchewan. Both have set ambitious renewable energy goals. In Alberta, the government’s Climate Leadership Plan sets a target of having 30% of Albertans’ electricity consumption be fulfilled by renewable sources by 2030. Saskatchewan has committed to increasing its renewable energy capacity to 50% of total capacity by 2030.
In Alberta, the government has created the Renewable Electricity Program to procure 5,000 megawatts of renewable electricity capacity by 2030. The program is managed by the Alberta Electric System Operator (AESO) – the entity responsible for the reliable operation of the province’s grid. Any renewable technology is allowable, but to be eligible for the program, the project must be based in Alberta. The CTFA won’t impact this program either as the AESO is exempt from any of its provisions. While the Alberta-only requirement will provide benefits to the province by the way of new investment and jobs (the government estimates $10.5 billion in new investment and 7,200 new jobs), it may not be the most affordable option for the province’s ratepayers since cheaper renewable electricity may be available outside the province.
Powering up some options
As we explain in Power Up: The hydro option, hydroelectricity is an excellent option for providing emission-free electricity. Since it has such a long lifespan and low operating costs, it’s generally the lowest cost option for generation sources. It also provides baseload power – a necessity for a reliable grid and something intermittent renewables such as wind cannot provide. Unfortunately, while Alberta and Saskatchewan have substantial in-province hydro options, they can’t be developed in the near term, which means they’ll likely rely on wind to meet their 2030 renewable goals if they only look within their own provinces.
Wind energy is great – its costs are consistently decreasing, and it should be part of any robust climate change solution – but all clean energy sources should be evaluated even if they aren’t located directly nearby. As luck would have it, Alberta and Saskatchewan’s next door neighbors have quite a bit of clean electricity to share. Both British Columbia and Manitoba supply a majority of their electricity needs with hydroelectricity as well as export electricity to other provinces and the United States. There is significant potential for this clean resource to help Alberta and Saskatchewan meet their own clean energy goals.
As the western provinces continue to address climate change, they need to do a better job working together.
On the technical front, increasing transmission capacity between the provinces is a vital first step. According to the Canadian Energy Research Institute, reinforcing the current transmission infrastructure between British Columbia and Alberta could allow an additional 500 megawatts of hydro to flow eastward. Additional hydroelectric development in British Columbia (such as Site C) coupled with new transmission could bring even more clean electricity to Alberta.
On the policy front, provinces need to reduce barriers to out-of-province competition for clean energy. Structuring current renewable procurement programs to accept any cost-competitive renewable source regardless of project location would be a good start. The provinces should also work together to incorporate electricity and the entities responsible for its management into the CTFA framework to allow fair and open competition. Doing so will help the West achieve its climate commitments at the lowest possible cost.
– Nicholas Martin is a policy analyst at the Canada West Foundation