Advancing a zero-emissions electricity grid based on renewables

The federal government’s stated goal of achieving a zero-emissions electricity system across Canada by the year 2035 is a foundational climate solution that unlocks and facilitates emissions reductions in other key sectors in the broader economy in Canada. It is crucial to achieve Canada’s climate goals, and the IEA and IPCC affirm5 that this goal is necessary for advanced economies like Canada to be in-line with contributing to the Paris Agreement’s goal of 1.5°C.

Getting to zero-emissions electricity by 2035 under the proposed Clean Electricity Regulations will require significant investment in the generation, transmission and demand side of electricity. It will also require unprecedented collaboration between all levels of government, including Indigenous governments, utilities and system operators. As many electricity investments require years to move from planning to commissioning, funding must be made available now, with clear signals for future federal support. Only with bold and strategic investments will we be able to successfully and equitably decarbonize the electricity sector and realize the benefits of clean electrification across Canada.

The untapped potential in distributed energy resources is significant – including on-site and community solar, energy storage, and demand response solutions. Distributed energy resources can help increase resiliency, manage the cost of electricity, reduce energy poverty, provide local jobs and economic development, and unlock new community capital from citizens eager to participate in climate action.

Low-income and vulnerable people—including remote and Indigenous communities— must have affordable and equitable energy access as Canada transitions to a clean electricity grid. Siting of renewable installations on traditional Indigenous territories, and reducing reliance on diesel in Indigenous and remote communities, requires special care and attention. By targeting renewable energy funds, there is significant opportunity to advance environmental equity while reducing emissions.

The federal government can play a specific and vital role in supporting clean electricity generation through the following investments and commitments in Budget 2023:

Total Recommended Investment:

$17.8 billion over five years, plus $3.1 billion over five years for investment and personal tax credit

Electricity sector transformation:

  1. $12 billion over five years to support clean electricity infrastructure deployment. These funds will support investments in provincial electricity system improvements, interregional transmission, clean generation, energy storage and other infrastructure to enable electricity system decarbonization by 2035. [NRCan]
  2. $4.8 billion over five years for investment in clean electricity projects and programs targeted to benefit Indigenous nations, low-income, and vulnerable communities. This can include but not be limited to renewables, energy storage, and demand side management. These federal investments should take the form of grants, not loans, wherever possible. [NRCan]
  3. $3 billion over five years for an investment tax credit to support clean electricity including renewables, energy storage technologies, and zero-carbon hydrogen. This mechanism should be at least comparable to the investment tax credit provided for carbon capture projects. [FIN, NRCan]

Best practices in clean electricity governance, market design, planning and deployment, to be supported by the new Pan-Canadian Grid Council and related departments:

  1. $50 million over five years to enhance regional cooperation between provinces and support projects and analyses for inter-provincial transmission capacity. [NRCan]
  2. $5 million to fund a consultative process with provinces, territories, municipalities, utilities, industry, NGOs and interested community members focused on least-cost pathways toward 100% clean electricity by 2035. [NRCan]
  3. $5 million over five years to fund an independent centre of excellence in clean electricity governance to support best practices in utility regulation, electricity market design, and land-use planning with a view to accelerate the deployment of grid-scale and distributed renewable energy in support of affordable, reliable and 100% clean electricity by 2035. [NRCan]

Distributed energy projects:

  1. $100 million over five years to add a new stream to the NRCan Smart Renewables and Electrification Pathways program focusing on deployment and scale-up of community financed micro-grids based on heat pumps, distributed solar generation, community-scale storage and virtual net metering. The program would support partnerships between utilities, municipalities and community partners such as energy cooperatives and Indigenous-owned renewables. [NRCan]
  2. $100 million over five years for a federal tax credit for personal investment in community distributed generation projects to leverage community investment in renewable energy. [NRCan]
  3. $50 million over five years to procure electricity or Renewable Energy Certificates for signature government buildings from new projects by renewable energy co-operatives. [NRCan]

Renewables in remote communities:

  1. Allocate up to an additional $800 million to programs specifically aimed at building Indigenous leadership and partnerships for clean energy deployment in remote Indigenous communities. Funding programs should be flexible and support Indigenous-led projects that reduce diesel consumption in homes and buildings through deep energy retrofits, and through renewable heat and power generation. [NRCan, CIRNAC, ISC, INFC, ECCC]