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Switch to clean electricity to lower Canadians' energy bills: report

Canadian Climate Institute also recommends aid for low-income households

IMAGE: Canadian Climate Institute report cover
Screenshot courtesy the Canadian Climate Institute.

The Canadian Climate Institute says switching to clean electricity will allow the average Canadian household to spend 12 per cent less on energy in 2050 than it does today.

This is according to its latest report, Clean Electricity, Affordable Energy: How federal and provincial governments can save Canadians money on the path to net zero.

“Think electric vehicles, heat pumps, induction stoves, that this energy future – contrary maybe to typical expectations – is actually a more affordable one than the one that we're under today,” Jason Dion, the Institute’s senior research director and one of the report's authors, told SustainableBiz. “That includes not only expenditure on energy itself, but also the equipment that that energy powers, so vehicles and furnaces.

“It also underscores that over time, as we scale up our use and production of all these technologies, like electric vehicles, heat pumps and others . . . that upfront cost starts to fall.”

The Canadian Climate Institute is a policy research organization founded in 2020 and headquartered in Ottawa.

The Clean Electricity report

The report indicates which provinces will benefit most from government funding for clean electricity, which includes the Smart Renewables and Electrification Pathways program, investment tax credits and Canada Infrastructure Bank funding.

Given their size, provinces like Ontario and Quebec are poised to receive the most money – $13.4 billion and $12.9 billion, respectively. However, the provinces still largely relying on fossil fuel generation may receive a greater proportional share of funding.

Saskatchewan, for example, is estimated to receive $2.6 billion for its 4.6 gigawatts of installed capacity, which translates to $580 million per gigawatt. Ontario’s per-gigawatt rate would be $330 million.

“The interesting thing within that . . . it's those provinces that weren't blessed with significant hydroelectric resources, they currently rely on thermal systems, so gas and gas generation coal, where it still exists,” Dion said.  “These provinces actually benefit 33 per cent more relative to their currently installed capacity than the hydro provinces, and the reason is that they have a bigger job in front of them.”

While the challenge may be bigger, the reward is the same, as Dion noted businesses are prioritizing grids with clean power.

Dion also stressed the need for governments to provide guidelines for building out electricity systems without undermining provincial jurisdiction, given the time it takes to hit clean energy goals.

“All that to say that there are some intricacies of the way these systems are managed and governed. That just needs to be updated for this new context,” he said. “So it's a policy need. And we've been underlining that provinces should make these changes and retain the ability to govern their own electricity systems their own way.”

A May 2022 report from the Institute also notes Canada’s clean electricity sector is forecast to triple its current labour force by 2050 to provide over 250,000 jobs.

Looking ahead

To avoid disadvantaging lower-income households, the report recommends targeted support and rate design, which Canada does not do. It states that low-income households would see savings of 1.3 per cent of average income.

While this benefit would be funded by higher charges for high-income households, this would amount to only 0.2 per cent of their incomes, the report claims.

“You could actually build for the fixed charges on people's bills, the part that doesn't vary depending on how much you use. You can build for that in line with their incomes. If you did that, in fact, you could really improve the fairness of how we recover the costs of electricity,” Dion said. “That's just one tool. So we wanted to emphasize that nothing is inevitable or baked-in when it comes to the affordability of this energy future.”

Next for the institute is a report scheduled for early 2024 on building heat decarbonization and the future of Canada’s gas networks.

Dion is optimistic about clean energy adoption by the provinces, both for environmental and practical reasons.

“In climate change and energy discussions, the politics around this can cast a long shadow. So I would expect that there will be certain provinces that are eager enough to get the support against the investment costs, that would lower the costs for their ratepayers, that have their own climate goals and are more than willing to sign on to these conditions in exchange for federal support,” he said.

“I think we'll definitely see some provinces signing up for these because the benefits are just so large, I think there's probably a whole middle range that will then see these other provinces acting (and) hear the drive and push from their business sector, their corporate sector, from constituencies.”

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