Clean Electricity Regulations

Summary#

The federal government published a proposal called the Clean Electricity Regulations that would set a national performance standard to cut greenhouse gases from fossil-fuel electricity. In modelling used for the proposal, the rules would help cut about 342 million metric tonnes (Mt) of CO2‑equivalent between 2024 and 2050 and show a net societal benefit of $28.9 billion (costs $73.6 billion, benefits $102.5 billion). This is a proposal (Canada Gazette, Part I) and not final law; the public comment period was open after publication on August 19, 2023 for 75 days.

What it does#

• Sets a national, unit-level emissions intensity limit of 30 t/CO2 per GWh (30 t/GWh) for fossil‑fuel electricity that applies in the main from January 1, 2035.
• Applies to electricity “units” that:
  • burn any fossil fuel,
  • have capacity of 25 MW or more, and
  • are connected to an electricity system covered by NERC reliability standards.
• The standard only applies in a year when a unit is a net exporter of electricity to that NERC‑regulated system. “Behind‑the‑fence” industrial units that do not export are generally excluded.
• Includes limited, time‑bound flexibilities:
  • A unit (not burning coal) may run up to 450 hours per year and emit up to 150 kilotonnes (150 kt) of CO2 that year instead of meeting the intensity standard.
  • A unit with carbon capture and storage (CCS) may average 40 t/GWh for up to 7 years after its CCS starts, or until December 31, 2039, if it can show short test periods at 30 t/GWh.
  • Existing units commissioned before January 1, 2025 get a phased approach tied to an “end of prescribed life” (generally 20 years from commissioning) so most do not have to meet the standard until that date or 2035, whichever is later; coal units must meet 2035 regardless.
• Requires registration (by end of 2025, or within 60 days of commissioning for later units), annual reporting and quantification of emissions (fuel‑based or CEMS).
• Repeals two older regulations (coal and natural‑gas rules) as part of the transition; those repeals come into force later under the draft text (January 1, 2035 and January 1, 2045 for the two items listed).
• Enforcement would use powers under the Canadian Environmental Protection Act, 1999 (penalties and compliance tools).

Who's affected#

• Electric utilities and owners/operators of large generating units (those with capacity ≥ 25 MW) that burn fossil fuels.
• Industrial sites that own large generators and that sell (export) electricity into the grid. Units that do not export electricity are mostly outside the rules.
• Provinces and territorial electricity systems, especially those that rely more on fossil fuels now (examples modelled as particularly affected include Alberta, Saskatchewan, Nova Scotia and New Brunswick).
• Households and businesses could see changes in electricity rates. The federal modelling found small national average impacts, but larger temporary increases in some provinces in the 2030s–2040s.
• Indigenous, northern or remote communities that are not connected to a NERC‑regulated system would generally be exempt, but Indigenous groups were engaged and raised concerns about affordability and participation.
• Environment and Climate Change Canada led the proposal, with Health Canada listed among sponsoring departments (health co‑benefits from less air pollution were also discussed).

Why it matters#

• It is designed to speed up the shift to low‑ and zero‑emission electricity. Cleaner electricity is needed if Canada intends to electrify transport, buildings and some industry on the path to net‑zero by 2050.
• The proposal is estimated (by the government’s models) to reduce emissions by about 342 Mt CO2e over 2024–2050 and to produce a net societal benefit of $28.9 billion. Those numbers come from modelling assumptions and are uncertain.
• The rules would change investment decisions in generation, storage and transmission. The modelling shows much more non‑emitting capacity and new interprovincial transmission in a regulated scenario. The draft analysis estimates $53.7 billion in incremental capital for new generation and $6.7 billion for new interprovincial transmission over the period modelled.
• Local air quality and health could improve where emitting plants are replaced. The Regulatory Impact Analysis Statement notes reduced NOx, SOx, PM2.5 and mercury in several provinces, with associated but not fully monetized health benefits.
• There are trade‑offs and uncertainties. The department’s modelling tested many options (different standards, thresholds, flexibilities, demand scenarios). Results depend on future electricity demand, provincial choices, technology costs (e.g., CCS, storage, nuclear) and how provinces set rates. The proposal aims to balance emissions reductions with reliability and affordability.
• This is a consultation stage document. Interested parties had opportunities to comment during development and a formal public comment window followed the Gazette publication (the notice allowed 75 days). The proposal could change before any final regulation is issued.