A risky game of ‘ragging the puck’ on energy policy

Mike Blanchfield is PPF’s Director, Energy Policy. Arash Golshan is a PPF Policy Associate.

When it weighed in on the unconstitutionality of the federal Impact Assessment Act (IAA), the Supreme Court of Canada suggested a constructive path forward – one that dared Canada’s polarized politics to do better. 

In its Oct. 13, 2023, decision, a 5-2 majority of the court wrote in a non-binding opinion that the federal government overstepped its jurisdiction into provincial affairs through the IAA’s power to review energy, mining and other industrial projects to protect the environment and Indigenous people.  

The decision declared key sections of the law unconstitutional, which thrilled an Alberta government that brought forth the challenge. The court said that parts of the law were constitutional and affirmed that the federal government still maintains some jurisdiction over such projects. It urged the two sides to collaborate to find a solution. 

The opposite happened. The federal and provincial governments reacted with two wildly disparate interpretations. The result is a political dissonance that comes with dire consequences – it is a setback in the fight to reduce GHG emissions and the race to a net-zero future.  

This is abundantly clear in the context of the Public Policy Forum’s recent Project of The Century report, which described the pressing need to massively expand Canada’s electricity grid. The report describes this two-fold challenge: cleaning the remaining 16 per cent of the grid and expanding it two to three times by 2050. 

The PPF’s report dedicated an entire chapter to the “hurry-up offence” strategy, our attempt to showcase the urgency of getting shovels in the ground as soon as possible for the electricity buildout. The “hurry-up offense” is a central theme that drew upon the football metaphor that stresses playing the game differently in the face of a clock rapidly ticking down. 

The fallout of the recent Supreme Court decision flies in the face of that speed-focused strategy. If anything, it embodies a far more troubling sports metaphor that is all too familiar to Canadian hockey fans – the political bickering amounts to “ragging the puck” or wasting time that will run out the clock. 

Climate change doesn’t care about any of this. It won’t wait for our fights to be over before it shows its worst impacts. This is also true for the flow of investments that will be redirected to other jurisdictions in the absence of policy certainty.

Remember, Canadian utilities are getting offers to move their investment south of the border and export electricity north due to the U.S.’s clearer regulatory system and the advantages offered by the Inflation Reduction Act.  

Experts and observers have been warning about the potential for the court’s opinion on the jurisdictional conflicts in the IAA to spill over into the implementation of a Clean Electricity Regulation (CER) or the federal government’s long-anticipated emissions cap on the oil and gas sector. 

This legitimate concern is not being acknowledged – at least publicly – in Ottawa. At a post-ruling press conference, Environment Minister Steven Guilbeault said the federal government would table amendments to make the law constitutional and “following the guidance of the court and collaborate with provinces and Indigenous groups to ensure an impact assessment process that works for all Canadians.” Natural Resources Minister Jonathan Wilkinson repeatedly emphasized his hope this would be the last time Ottawa and provinces brought their fights to the court. 

There is next to no chance of that happening, given the declaration of the Alberta government. 

The possibility of continued legal wrangling over every single misalignment between the provincial and federal governments defies the imperative of the hurry-up offence strategy and hinders Canada’s ability to get all hands-on deck for the project of the century – building out the clean electricity grid in the drive to net zero. 

These conflicting views, which are threatening the CER, can be addressed. 

Independent observers are increasingly coming to the conclusion that the current draft regulation does need some critical fixes with regard to its flexibility measures, without which an unacceptable risk will be imposed on the system’s reliability and affordability.  

Fortunately, we are still in the 75-day consultation period of the regulation before its finalization in early 2024 (this phase might need to be extended to allow for more reflection by all the stakeholders). Regional Energy and Resource Tables can serve as a critically helpful structure to ensure the final version of the regulation is reflective of provinces’ real-world concerns. 

Arguably, the political consequences of the potential shortfalls in electricity affordability or reliability have historically been shouldered by the provincial governments. As mentioned in our report, “Canadians tend to view affordable and reliable electricity as something of a birthright and are not hesitant to hold to account provincial governments that disappoint them on rates or policy.”  

Our report acknowledges that there are many obstacles to doubling or tripling the capacity of our grid to meet the needs of 21st century electrification, but it makes clear there is one way forward, one that amplifies what Chief Justice Richard Wagner wrote in the majority opinion of court. 

Wagner called for, “Parliament and the provincial legislatures to exercise their respective powers over the environment harmoniously, in the spirit of cooperative federalism.” 

PPF also underscored this fundamental requirement in its July report, calling for “the political will to act quickly and hold the public imagination along the grand journey to a cleaner, healthier future.”  

Today, we’re adding emphasis to that key phrase – to act quickly. The time has come for political leaders to sideline Wagner and his fellow jurists. The judges did their job, now it is up to the politicians.  

The hurry up offense doesn’t work in a courtroom.