The draft clean electricity regulations, released last week, serve as a warning that neither the provinces nor industry nor common sense will stand in the way of the federal government’s commitment to meeting the radical emissions targets agreed to in Paris in 2015. Whether the Liberals will successfully force power grids to achieve net zero by 2035 is far from certain, but one thing seems clear: the climate agenda has put the final nail in the coffin of deregulation. Big government is here to stay.
The draft regulations were immediately attacked by the premiers of Alberta and Saskatchewan as being “unconstitutional” and “unachievable.” Although there have been varying estimates of how much the transformation will cost — with Environment Minister Steven Guilbeault disingenuously claiming Canadians will save money by switching away from fossil fuels (which his carbon tax has artificially inflated in price) — there can be little question that it would be an expensive undertaking for the Prairie provinces.
Unlike British Columbia, Manitoba, Quebec and Newfoundland, they are not endowed with the geographical features that permit an abundance of hydroelectricity. Nor do they have a legacy of nuclear power, like Ontario does. Saskatchewan currently relies on fossil fuels for more than three-quarters of its electricity supply.
Alberta also relies heavily on fossil fuels, but is considerably greener than a decade ago. The province had planned to phase out coal generation by 2030, but has managed to make the transition ahead of schedule (something that’s almost unheard of in government), with its last coal plant due to be decommissioned later this year.
Most of the coal has been replaced with gas-fired generators, which produces half as much greenhouse gasses. It’s thus not possible to say that Alberta hasn’t been doing its part to try to reduce the country’s overall emissions. But that’s clearly not good enough for the Liberals, which will stop at nothing to attain the Paris Agreement’s misguided target of achieving net zero by 2050.
Lost in all this is any discussion of fostering competitive markets to spur innovation and bring down prices, or of limiting the size and scope of government. In the 1970s and early ’80s, governments were faced with many of the same challenges as they are today: inflation was rampant, economies were stagnating and crime was a blight on many cities. This spurred a wave of deregulation in many western countries, including Canada, which opened up sectors such as telecom and air travel, driving down prices, increasing choice and reinvigorating the economy.
In this country, both Alberta and Ontario experimented with electrical deregulation, with varying degrees of success. Ontario’s competitive market opened in 2002, but was short-lived , with the government quickly succumbing to political pressure over rising prices that were largely caused by unrelated factors. Alberta also caved to pressure that resulted in numerous market interventions before prices had time to stabilize, but was largely successful at creating a competitive electrical generation market and giving consumers some choice on the retail side.
But a competitive market is antithetical to the type of overbearing control the Trudeau Liberals are looking to exert over electrical generation. Not only will the new clean electricity regulations dictate what type of generators can be used, preventing companies and governments from striking a balance between the environment and affordability, they represent the latest change in a constantly shifting, and increasingly murky, set of environmental regulations that will only serve to scare away investors.
Not content to let the carbon tax incentivize market players to find ways to reduce emissions, the government has also imposed industry-specific emissions caps on oil and gas, introduced clean fuel standards, banned the sale of new gas-powered vehicles by 2035 and made it virtually impossible to build new energy infrastructure, all while giving tens of billions of taxpayer dollars to favoured industries to produce products demanded by governments, rather than consumers.
Ottawa’s ever-changing rules do not provide the type of stability businesses need to make long-term investments — not just in energy and electrical generation, but in other sectors of the economy, as well. This is likely one of the reasons why Canada has seen a sharp decline in gross business investment since the Liberals took office in 2015.
The contemporary push to displace competitive markets with central planning comes at a time in which clear price signals could serve an important role in the energy transition. Many Canadian households and small businesses are charged for electricity based on the time of day, with prices dropping overnight and hitting a peak in the afternoon or early evening. But those traditional time-of-use patterns are quickly changing, and governments have significant concerns about the coming influx of electric vehicles overloading the grid.
If consumers could monitor spot prices, they could charge their vehicles and other devices when prices, and thus demand, is low, saving them money and protecting the grid. It’s not inconceivable that automated systems could one day be used to charge battery backups for solar-powered homes and office buildings at optimal times.
Instead of harnessing the power of competitive markets as a force for good, however, the Liberals have chosen to increase the size of centralized bureaucracies and dictate how individuals, businesses and even other levels of government conduct their affairs. It’s a strategy that’s limiting individual freedom, subverting provincial autonomy, constraining the economy and making life increasingly unaffordable.
Source: National Post
