Decarbonizing Canada’s Electricity Generation Lessons from Ontario and Prospects for Alberta

By Kenneth P. Green of The Fraser Institute.

• Canada’s Clean Electricity Regulations will require all provinces to fully “decarbonize” their electricity generation as part of the federal government’s broader “Net Zero 2050” greenhouse gas emissions mitigation plan.
• Ontario’s experience with decarbonization in phasing out its coal-fired electricity power plants between 2008 and 2016 was illustrative. Ontario’s residential electricity costs increased by 71 per cent over the period, far above the 34 per cent average increase for the rest of Canada. In 2016, Toronto residents paid $60 more per month for electricity than the average Canadian. Similarly, during the same period, industrial electricity prices in Ontario increased significantly faster than in the rest of the country.
• As Ontario continues to face pressure to decarbonize by phasing out natural gas, studies suggest this will lead to even higher electricity costs, with serious negative impacts on jobs, the economy, and grid reliability.
• Alberta is expected to face similar challenges as it moves to decarbonize its electricity generation. Estimates indicate that this transition will come at a significant cost. The Alberta Electric System Operator projects that achieving net zero could cost the province an additional $44.1 to $52.1 billion by 2041—a 30 to 36 percent increase in spending.
• The lesson from Ontario is clear: rapid decarbonization can result in significant price increases, placing a heavy burden on both consumers and industries. This experience should serve as a cautionary tale for other jurisdictions, including Alberta, as they pursue decarbonizing their electricity generation.