Ottawa may tie billions in 'green energy' funding to 2035 'net-zero' electricity target: report

THE CANADIAN PRESS/Graham Hughes and Twitter/Johnathan Wilkinson

Amid firm opposition from Alberta and Saskatchewan, the federal government may restrict billions in tax credits and grants for provinces that do not commit to the 2035 ‘green energy’ target for a 'net-zero' electricity grid.

"We certainly are considering that," Wilkinson told The Canadian Press, adding: "There is […] consultation that's going on with respect to the investment tax credits."

"We want to hear from people. We also want to think about if we're going to put those kinds of constraints or strings on those things, how we best do that."

Environment Minister Steven Guilbeault said the regulations for their 2035 target could be available as early as this week, including a timeline for natural gas power plants to be closed or fitted with carbon-capturing systems.

Alberta Premier Danielle Smith says her province intends to reach carbon neutrality by 2050 but warned Guilbeault in May not to "accelerate […] the timeline" to 2035 if the technology isn't there.

Alberta Premier Danielle Smith told PM Justin Trudeau that a net-zero power grid "is not possible by 2035."
Smith adds that 42% emissions reduction by 2030 — "essentially a production cap" — is not "realistic or feasible."

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Energy Minister Jonathan Wilkinson concurred the disagreement does not stem from whether to build non-emitting electricity but on how fast to achieve that aim.

"The gap between us is not about whether we should have a non-emitting grid; it's about whether we get there by 2035 or somewhere a little bit later," he said.

A document released jointly by Energy Minister Jonathan Wilkinson and Environment Minister Steven Guilbeault opens the door to forcing an accelerated 'net-zero' transition onto the provinces for access to billions in tax credits for 'green energy' projects.

Budget 2023 outlined possible restrictions for the new refundable 15% clean electricity investment tax credit, including other credits for hydrogen production, clean technology and carbon capture and storage systems.

The document, published Tuesday, pegs their total value at over tens of billions of dollars over the next 12 years. 

In addition, the feds have made available at least $3 billion in grants for renewable electricity projects and upgrades to make grids more energy efficient.

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While several provinces appear eager to embrace the transition, Alberta, Saskatchewan, Nova Scotia, and New Brunswick have expressed reluctance as the 2035 target forces them to replace most of the power they already produce. Coal and natural gas supply between 30% and 85% of the power for these provinces. 

Alberta and Saskatchewan have repeatedly told their federal counterparts they cannot comply with the mandate.

"We will not attempt the impossible when it comes to power production in our province," Saskatchewan Premier Scott Moe said in May.

Pipeline Online said the province (84%) relied heavily on natural gas and coal to satisfy its energy demand last winter. 

"We will not risk plunging our homes, our schools, our hospitals, our special care homes, our businesses into the cold and darkness because of the ideological whims of others."

"A 2035 net-zero power grid is unachievable," Danielle Smith says, outlining the devastating impact Trudeau's 'just transition' plan would have, adding she stands with Sask. Premier Scott Moe who pushed back against the feds energy plans too.https://t.co/tAyeKeYiOH pic.twitter.com/ipSMWbqnAj

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On May 17, the Saskatchewan Party and NDP Opposition voted unanimously to support the province's plan for affordable, reliable power generation to 2035 and beyond. That includes not phasing out conventional coal by 2030 or transitioning their electricity grid to 'net-zero' by 2035.

"We're going to continue to chart Saskatchewan's path," Moe told reporters, adding: "It may not necessarily be Canada's path."

Guilbeault told the province it will be illegal to operate coal-fired power plants past 2030 without technology to reduce carbon emissions. "Not complying with this regulation would violate Canada's Criminal Code."

On May 26, Smith told Rebel News that her government intends to "stand with Premier Scott Moe" but would not reopen the coal debate for her province.

"Would a re-elected UCP government consider keeping the coal plants open short-term to keep electricity costs down?" Rebel asked the UCP leader. She replied: "We are based principally on natural gas, and Saskatchewan is based on a combination of coal and natural gas.

"Alberta is in a different position than Saskatchewan because of a 'very aggressive' transition to natural gas," continued Smith. "I understand the last of those conversions will be finished this year or next."

The UCP outright rejects production caps to curb oil and gas emissions, arguing it would reduce production without achieving a ‘net-zero’ electricity grid by 2035.

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Wilkinson commended Alberta for being 'well ahead of schedule' on retiring or converting its coal-fired electricity generators.

"Emissions reduction has to happen at the industrial level — [but] the number one targets are reliability and affordability," clarified Smith.

According to a report by the Public Policy Forum (PPF), the cost of the federal government expediting a 'net-zero' electricity transition would exceed the country's entire economic output. It would cost $1.7 trillion, more than the country's expected GDP in 2023.

On July 19, Smith warned electricity costs would skyrocket between 200% to 500% of current monthly expenses. 

"Imagine your home or business power bill increasing by 200% — 500% or even more over the next decade. I can't afford that. Can you? Let's bring some logic and reason to this conversation and modernize our grid in an affordable and environmentally responsible manner," she said.

The Alberta government will not be moving forward with approvals for new ‘green energy’ projects amid concerns from residents on responsible land use.

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Wilkinson clarified that he's not trying to put the provinces against the federal government but said connecting billions in 'green energy' investment to progress toward Canada's goals is necessary.

"My style is not to have big fights," he said. "I like to listen to what people and provinces have to say and figure out a pathway through which we can accomplish the goals we all want to achieve."

On Friday, Smith announced her province would pause approvals for new significant wind and solar power projects until the end of next February to address municipal and landowner concerns about their impact on farmland, scenery, reliability and clean-up towards the end of their shelf life.

Wilkinson said he is taking Alberta "at its word" that the pause is just to ensure everything is being done correctly in the face of faster-than-expected growth, particularly in solar power.

He also said a good conversation is already happening with Alberta, and he is convinced an agreement between the two governments is possible.