Clean Electricity Regulations

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Canada.ca  Environment and natural resources  Climate change
 Canada's climate plan
Clean Electricity Regulations
One of the most important ways of reducing emissions is by

electrifying more parts of the economy that currently rely on
fossil fuels, such as transportation, home and water heating, and
industrial activities.
Clean, affordable and reliable electricity
Learn about the draft regulations
https://www.canada.ca/en/services/environment/weather/climatechange/climate-plan/clean-electricity-regulation.html 1/19
8/23/23, 8:17 AM Clean Electricity Regulations - Canada.ca
Draft Clean Electricity Regulations

In Canada, 84 per cent of electricity comes from sources such
as hydroelectricity, solar, wind, and nuclear, which are far less
polluting than electricity generated from unabated (no carbon
capture and storage) coal, oil, and natural gas. As Canada
aims to achieve a net-zero emissions economy by 2050, its
electricity supply will need to at least double by then,
according to recent studies 2. Meeting this surging demand,
while avoiding an increase in greenhouse gas emissions from
the electricity sector, makes this a critical time to put in place
the Clean Electricity Regulations (CER).
By implementing the CER now, necessary investments can be

made early, to help transition Canada to a net-zero electricity
grid starting in 2035 and ensure Canadians can still enjoy a
reliable and affordable electricity system. The draft
regulations were developed around three core principles:
1. maximize greenhouse gas reductions to achieve net-zero

emissions from the electricity grid by 2035
2. maintain electricity affordability for Canadians and
businesses
3. maintain grid reliability to support a strong economy and
meet Canada’s growing energy needs
The CER is an integral part of Canada’s 2030 Emissions

Reduction Plan to help the country reach its emissions
reduction target of 40 to 45 per cent below 2005 levels by 2030
and net-zero emissions by 2050. A clean electricity grid will be
the backbone of a prosperous, low-carbon future. Learn more

about the Government of Canada’s broader electrification
strategy.
Send your feedback
Help shape Canada’s future clean electricity sector.

Send your feedback on the draft Clean Electricity
Regulations by November 2, 2023. The final
regulations are expected to be published in the
Canada Gazette, Part II, in 2024. Comments are
requested to be submitted through the new Online
Regulatory Consultation System (ORCS).
Technical backgrounder
Technical backgrounder on proposed Clean Electricity
Regulations
At the 2021 United Nations Climate Change Conference

(COP26), Prime Minister Justin Trudeau announced that
Canada had set a goal of a net-zero electricity grid by
2035.
While Canada was one of the first countries to commit to

a net-zero grid, we have since been joined by all G7
countries in committing to net-zero electricity systems by
2035 as a key foundational step in achieving a net-zero

economy by 2050.
To support that goal, on August 10, 2023, Environment

and Climate Change Canada made public the draft Clean
Electricity Regulations (CER). A seventy-five (75) day
formal consultation period begins on August 19. The
Government of Canada designed the CER to maximize
the reduction of greenhouse gas emissions from the
electricity sector while enabling Canadians to continue to
have access to reliable and affordable power. The CER
will set a technology-neutral emissions standard for the
generation of electricity that is provided to the grid as of
2035.
To support reliability and affordability, the draft

regulations include flexibilities that allow a limited and
declining ongoing role for fossil fuel generation. This
flexible approach will enable provincial utilities and
system operators to plan and manage their systems in
accordance with relevant provincial circumstances, while
creating a clear signal for reducing emissions over time.
The CER is a critical part of an overall approach to the

clean electrification of the Canadian economy to ensure
that Canada can achieve its economy-wide net-zero goals
through increased electrification of vehicles, building
heating and industrial processes. This approach is being
supported by federal investments in clean electricity of
over $40 billion, including historic announcements in

Budget 2023, as well as by the recently launched Canada
Electricity Advisory Council.
The development of the draft Clean Electricity

Regulations
The draft regulations draw on the input from significant
engagement with all provinces and territories; public and
private utilities; Indigenous organizations; electricity and
energy system experts; industry; and civil society. That
engagement was launched with the Clean Electricity
Standard Discussion Paper in March 2022, followed by
the Proposed Frame for the Clean Electricity Regulations
in July 2022. Environment and Climate Change Canada
(ECCC) received over 315 written comments, held four
public webinars with more than 700 attendees, and
convened over 150 bilateral meetings.
This extensive engagement helped to inform the design

of the draft regulations. For example:
There is broad support for the three pillars of

emissions reductions, affordability and reliability as
well as the proposed regulatory architecture of a
technology-neutral emissions standard and
flexibilities to minimize the stranding of large capital
assets (generating units) and to enable the
continued use of emitting generation for grid back-
up purposes or to supply ‘peak’ power.
Most commenters emphasized the need to enable

the continued use of some fossil fuels, barring coal,
in electricity systems after 2035, in order to maintain
reliability as systems complete their transition from
emitting sources while also expanding generation in
order to respond to demand from an increasingly
electrified economy. The draft regulations allow for
the continued use of emitting generation in specific
circumstances to maintain affordable and reliable
electricity.
The draft CER includes flexibility for units
incorporating CCS technologies, reflecting concerns
by utilities and provinces that units installing this
technology will need a reasonable period of time to
optimize its operation.
Parties shared a wide range of views regarding the
treatment of industrial electricity generation (also
known as co-generation as it is typically involves the
simultaneous production of electricity and steam for
industrial use). Many argued that the CER should not
apply to cogeneration as there are not sufficiently
mature low-emitting alternative technologies to
produce high-temperature heat. Others worried that
not covering co-generation could lead to a large
build-out of industrial electricity generation whose
emissions would negate the objective of the draft
regulations. The draft CER would cover all generation
units that are connected to a North American Electric
Reliability Corporation (NERC)-regulated electricity

system and that have net exports to the system (i.e.,
they sell more electricity to the grid than they buy).
There is deep interest among Indigenous peoples in
participating in and benefiting from the clean energy
transition. However, they support the exemption of
remote communities because of the challenges in
fully replacing diesel generation in those
communities.
During the development of the draft CER, modelling

exercises were done to test the impact of regulatory
parameters. The model included constraints to reflect
real-world requirements for system reliability as well as
expert information on the cost and readiness of
technologies. In this way, the draft CER is premised on
maintaining reliability and least cost pathways to net-
zero using technically feasible options.
The Clean Electricity Regulations

Disclaimer: This summary does not replace the legal text
of the regulations.
The draft CER will set a GHG emissions standard on

electricity generators. This technology-neutral approach
will give operators of electricity generating units the
discretion to determine the least costly and most
practical pathway to comply.
The CER would apply to any unit that meets the three
following criteria:
uses any amount of fossil fuels to generate

electricity; and
has a capacity of 25 megawatts (MW) or greater; and
is connected to an electricity system that is subject to
North American Electric Reliability Corporation
(NERC) standards (‘NERC-regulated electricity
system’).
An electricity generation unit (‘unit’) means an assembly

of equipment that generates electricity. It must include
at least a boiler or combustion engine and may include
carbon capture and storage (CCS) systems.
Only units that are net exporters to a NERC-regulated

electricity system in a given calendar year would be
subject to the CER’s performance standard for that year.
Net exporters export more electricity to a grid than they
import from it.
The performance standard would be 30 tonnes of CO2

per Gigawatt hour of electricity generated (“30 t/GWh”)
as measured on an annual average basis. As a frame of
reference, the best performing natural gas plants in
Canada currently emit in the range of 350 to 420 t/GWh,
and conventional coal units emit about 1,000 t/GWh.
That standard would apply starting:
on January 1, 2035, for all units:

that combust coal or petroleum coke,

that are commissioned on or after January 1,
2025, or
that increased their generation capacity by 10%
or more since registration of the unit.
on the latter of January 1, 2035, or January 1 of the
year in which the prohibition in subsection 4(2) of
the Regulations Limiting Carbon Dioxide Emissions
from Natural Gas-fired Generation of Electricity begins
to apply to a “significantly modified” unit (a unit that
has ceased burning coal).
for any other unit, the latter of January 1, 2035 or 20
years after its commissioning date.
This approach provides considerable lead time to

provinces, while the 20-year End of Prescribed Life
provision also helps minimize stranded assets.
Flexibilities
In order to ensure the continued operation of a reliable
and affordable electricity grid, the draft CER contains a
number of flexibilities.
The draft regulations provide an exemption for the

use of fossil fuel-fired units in emergency
circumstances.
They do not apply to small fossil fuel-fired units less
than 25MW or to units not connected to the broader
NERC grid. Over 97% of Canada’s electricity
emissions are from units over 25MW, and exempting

units in remote communities recognizes the
technical challenges these communities face in
transitioning fully to clean electricity. Rather than
apply the draft CER to these communities, the
federal government is addressing their clean energy
needs via the $520 million Clean Energy for
Indigenous, Rural and Remote Communities
program and the Indigenous Off-Diesel Initiative.
The draft regulations also allow the use of unabated
fossil fuels, barring coal, on a limited basis, such as
for meeting additional generation requirements
during periods of peak power demand. These
‘peaker provisions’ will be limited to 450 hours per
year and a total of 150 kt of CO2 in a given year per
unit. This will enable regional grids to be stable and
avoid black outs during peak winter and summer
periods when electricity use is the highest.
In addition, for a maximum of seven years (or
December 31, 2039, whichever is first), a unit using
CCS may operate with an emission intensity of up to
an annual average of 40 t/GWh if it can demonstrate
that the unit is capable of operating at 30 t/GWh.
This will give time to optimize the capture rate of CCS
equipment.
These flexibilities will be further refined through ongoing

engagement with interested parties before the
regulations are finalized, which is expected to occur in
2024.
Quantification of electricity generated and of emissions

A unit’s total generation is the quantity of electricity it
generated during the course of a year, not simply the
quantity it exported to a NERC-regulated electricity
system.
A unit’s total emissions can exclude the emissions

captured by its CCS system only if these emissions are
permanently stored in a storage project that meets
prescribed criteria.
Key findings of the Regulatory Impact Analysis

Statement
As is the case with all federal regulations, a Regulatory
Impact Analysis Statement (RIAS) accompanies the draft
CER. The RIAS describes the projected impacts of the
draft regulations on the electricity sector’s generation
mix and its greenhouse gas emissions, as well as the
resulting societal costs and benefits and the expected
changes to electricity rates compared to a scenario
without the CER. Changes that would be expected to
occur regardless of the CER, such as a large growth in
electricity generation, ongoing expenditures on
maintenance, retirement and replacement of assets, are
included in the baseline comparison scenario. The RIAS

also assumes that, as of 2030, remaining electricity
generation emissions would be fully exposed to carbon
pricing.
Over the 27-year period from 2024-2050, the CER are

expected to result in almost $29 billion in net benefits for
Canadians from reduced damage due to GHG emissions
and savings from reduced fossil fuel use. This value for
net benefits is likely underestimated, as it does not take
into account benefits from avoided health care costs due
to reduction in air pollutants, such as mercury.
Clean, affordable and reliable electricity will provide the

foundation for achieving a net-zero emissions economy
by 2050 through emission reductions in other sectors,
such as transportation. In addition, the draft CER are
expected to deliver nearly 342 megatonnes (Mt) of
cumulative GHG emissions reductions between 2024 and
2050 from the electricity generation sector itself. The
draft regulations would also shift the mix of generation
sources in Canada’s electricity system towards low- or
non-emitting sources more quickly and to a greater
extent than would be expected in a scenario without the
CER, which in turn will support greater investment in
electricity storage and transmission capacity.
Regardless of the CER, electricity systems will need heavy

investments over the next few decades, both for routine
replacement of power plants and to expand generation
capacity to support the demands of a growing

population and the increased electrification of the
economy as Canadians switch from fossil fuels to
electricity to power transportation, home heating and
industry. The RIAS assumes that electricity demand will
increase by at least 1.4 times current levels by 2050,
consistent with current trends. It also includes a
sensitivity analysis using an increase of 2.5 times current
levels by the same year, reflecting higher demand
growth associated with achieving economy-wide net-zero
emissions by 2050. These projections are broadly
consistent with a number of forecasts, including the
Canada Energy Regulator’s most recent 2023 projection
of 2.35 times current demand levels in a scenario
achieving economy-wide net-zero by 2050.
ECCC estimates that, in the absence of the CER, under the

relatively modest demand growth assumption of
approximately 1.4 times current levels, more than $400
billion in investments will be needed nationally through
2050 to meet increased demand while also undertaking
routine maintenance and refurbishment. The CER is
anticipated to add relatively minimal additional costs to
that overall investment. The RIAS estimates that the
incremental additional costs to ensure the grid is non-
polluting will increase national average residential
electricity rates (in undiscounted 2022 constant dollars)
relative to a scenario without the CER by 0.08 cents per
kWh in 2035, 0.49 cents per kWh in 2040 and 0.26 cents
per kwh in 2050. This represents an incremental increase
attributable to the draft regulations of less than 1% in
2050. As reference, 2021 rates ranged from 7.4 cents
/kWh in Quebec to 17.4 cents/kWh in PEI.
These estimates do not take into account the full scope

of the more that $40 billion of funding the federal
government has now committed to help provinces,
territories and utilities transition to net-zero electricity
systems. If provinces choose to take advantage of these
measures, it is projected that the federal government
would shoulder more than half of the incremental costs
of the CER, reducing the impacts on ratepayers.
Moreover, analysis from the Canadian Climate Institute

shows that household expenditures on energy as a whole
(including electricity, fossil fuels, and energy-using
equipment) will decrease by 12% by 2050 as Canadians
shift away from using fossil fuels towards clean
electricity. * Even accounting for the investments needed
to expand and clean the grid, using electricity as our
predominant energy source will save Canadians money
as they stop paying for more expensive gasoline, diesel,
home heating oil, and natural gas, all of which are
subject to price volatility due to global supply factors
outside of Canada’s control.
A multi-pronged approach to clean electricity
While the CER is a central component of the federal

government’s approach to achieving clean electricity, it is
not the only policy supporting a net-zero electricity grid
by 2035.
As outlined in “Powering Canada Forward: Building a

clean, affordable and reliable electricity system for every
region of Canada” (published August 8, 2023), the
Government of Canada is taking a comprehensive and
collaborative approach to building a net-zero grid in a
way that ensures continued access to affordable, reliable
power by all Canadians. Following the historic
investments made in Budget 2023, the Government of
Canada has now committed over $40 billion to support
the transition to a net-zero grid reliably and affordably
across all regions. These include:
Nearly $3.0 billion for the Smart Renewables and

Electrification Pathways Program.
$10 billion in low-cost financing from the Canada
Infrastructure Bank for clean electricity projects.
A 15 percent refundable Clean Electricity Investment
Tax Credit – with an estimated cost of $25.7 billion
over the lifetime of the incentive – for eligible
investments by taxable and non-taxable entities in
certain technologies for the generation and storage
of clean electricity and its transmission between
provinces and territories.
A 30 per cent refundable Clean Technology

Investment Tax Credit for eligible investments by
businesses in certain electricity generation and
storage equipment, low-carbon heating, and
industrial zero-emission vehicles and related
charging or refuelling infrastructure.
A 30 per cent refundable Clean Technology
Manufacturing Investment Tax Credit for eligible
investments in machinery and equipment used to
manufacture or process clean technologies, or to
extract, process, and recycle key critical minerals.
$520 million for the Clean Energy for Indigenous,
Rural and Remote Communities programs for
renewable energy and capacity-building projects and
related energy efficiency measures across Canada.
This includes the complementary Indigenous Off-
Diesel Initiative, which provides clean energy training
and funding for Indigenous-led climate solutions in
remote Indigenous communities.
The Government of Canada is working closely with

provinces, territories and experts to support the
electrification agenda. It launched the Regional Energy
and Resource Tables in 2022 to prioritize and advance
net-zero growth opportunities. Through the Regional
Tables, the Government is also seeking to establish
formal collaboration with Indigenous partners to identify
and accelerate opportunities to transform Canada’s
traditional resource industries and advance emerging

ones. In May 2023, the Canada Electricity Advisory
Council was launched as an independent body of 19
experts who will provide the Government of Canada with
advice—through the Minister of Natural Resources—to
help accelerate investments that promote sustainable,
affordable and reliable electricity systems.
Conclusion
Clean electricity is fundamental to achieving a net-zero
economy by 2050. The draft CER have been designed to
achieve this while enabling the continued provision of
affordable and reliable electricity to Canadians and their
businesses.
Interested parties are invited to provide feedback to

inform the final version of the regulations. A seventy-five
(75) day formal consultation period begins on August 19.
Past engagements
Environment and Climate Change Canada engaged
extensively with industry, utilities, experts, provinces and
territories, Indigenous organizations, and non-governmental
organizations to design the CER.
Clean Electricity Regulations Frame Document (July 2022)

A Clean Electricity Standard in Support of a Net-zero
Electricity Sector: Discussion Paper (March 2022)
Opening the Loop: a Clean Electricity Standard Webinar

(March 2022)
Electricity profile by provinces and territories
Support for net-zero electricity
Learn about electricity in Canada

Electricity in Canada
Renewable energy
Energy sources and distribution
Canadian energy information portal
Electricity sector emissions
1 Canadian Climate Institute: The Big Switch – Electricity

in Canada
2 Canadian Climate Institute: The Big Switch – Electricity

in Canada and Canada Energy Regulator: Canada’s
Energy Future 2023: Energy Supply and Demand
Projections to 2050
* The Climate Change Institute’s Clean Electricity,

Affordable Energy (June 2023)
Date modified:
2023-08-21

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8/23/23, 8:17 AM Clean Electricity Regulations - Canada.

Canada.ca  Environment and natural resources  Climate change

 Canada's climate plan

One of the most important ways of reducing emissions is by

Clean, affordable and reliable electricity

Learn about the draft regulations

Draft Clean Electricity Regulations

By implementing the CER now, necessary investments can be

1. maximize greenhouse gas reductions to achieve net-zero

The CER is an integral part of Canada’s 2030 Emissions

the backbone of a prosperous, low-carbon future. Learn more

Send your feedback

Help shape Canada’s future clean electricity sector.

At the 2021 United Nations Climate Change Conference

While Canada was one of the first countries to commit to

2035 as a key foundational step in achieving a net-zero

To support that goal, on August 10, 2023, Environment

To support reliability and affordability, the draft

The CER is a critical part of an overall approach to the

over $40 billion, including historic announcements in

The development of the draft Clean Electricity

This extensive engagement helped to inform the design

There is broad support for the three pillars of

Most commenters emphasized the need to enable

Reliability Corporation (NERC)-regulated electricity

During the development of the draft CER, modelling

The Clean Electricity Regulations

The draft CER will set a GHG emissions standard on

uses any amount of fossil fuels to generate

An electricity generation unit (‘unit’) means an assembly

Only units that are net exporters to a NERC-regulated

The performance standard would be 30 tonnes of CO2

That standard would apply starting:

on January 1, 2035, for all units:

that combust coal or petroleum coke,

This approach provides considerable lead time to

The draft regulations provide an exemption for the

emissions are from units over 25MW, and exempting

These flexibilities will be further refined through ongoing

Quantification of electricity generated and of emissions

A unit’s total emissions can exclude the emissions

Key findings of the Regulatory Impact Analysis

included in the baseline comparison scenario. The RIAS

Over the 27-year period from 2024-2050, the CER are

Clean, affordable and reliable electricity will provide the

Regardless of the CER, electricity systems will need heavy

capacity to support the demands of a growing

ECCC estimates that, in the absence of the CER, under the

These estimates do not take into account the full scope

Moreover, analysis from the Canadian Climate Institute

A multi-pronged approach to clean electricity

While the CER is a central component of the federal

As outlined in “Powering Canada Forward: Building a

Nearly $3.0 billion for the Smart Renewables and

A 30 per cent refundable Clean Technology

The Government of Canada is working closely with

traditional resource industries and advance emerging